Delaware
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|
7389
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27-0788438
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(State or other jurisdiction of
incorporation or organization)
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(Primary Standard Industrial
Classification Code Number)
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(I.R.S. Employer
Identification No.)
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Large accelerated filer
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☐
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Accelerated filer
|
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☐
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Non-accelerated filer
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☐
(Do not check if a smaller reporting company)
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Smaller reporting company
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☒
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|||||||||
Title of Each Class of
Securities to Be Registered
|
|
Amount
to Be Registered |
|
Proposed
Offering Price per Share (1) |
|
Proposed
Aggregate Offering Price (1) |
|
Amount of
Registration Fee |
|
Common stock, par value $0.001 per share
|
|
2,389,611
|
|
$19.25
|
|
$46,000,012
|
|
$5,331.40
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|
|
|||||||||
|
|||||||||
(1)
|
Estimated solely for the purpose of calculating the registration fee for the securities pursuant to Rule 457(c) under the Securities Act of 1933, as amended. The price per share and aggregate offering price are based on the closing price of the registrant's common stock on February 8, 2017, as reported on the OTCQX U.S. market.
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|
Per Share
|
Total
|
||||||
Public offering price
|
$
|
$
|
||||||
Underwriting discount and commissions (1)
|
$
|
$
|
||||||
Proceeds, before expenses, to us
|
$
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$
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Page
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Prospectus Summary
|
1 |
Risk Factors
|
9 |
Special Note Regarding Forward-Looking Statements
|
23 |
Use of Proceeds
|
24 |
Dividend Policy
|
25 |
Capitalization
|
26 |
Dilution
|
27 |
Selected Historical Financial Information of Boston Omaha
Corporation
|
28 |
Unaudited Pro Forma Condensed Combined and Consolidated Financial Information
|
29
|
Management's Discussion and Analysis of Financial Condition and Results of Operations of Boston Omaha
Corporation
|
38 |
Business
|
47 |
Management
|
56 |
Executive Compensation
|
61 |
Certain Relationships and Related Party Transactions
|
63 |
Principal Stockholders
|
67 |
Description of Capital Stock
|
68 |
Shares Eligible for Future Sale
|
72 |
Certain U.S. Federal Income and Estate Tax Considerations to Non-U.S. Holders
|
73 |
Underwriting | 76 |
Legal Matters
|
76 |
Experts
|
76 |
Where You Can Find More Information
|
76 |
Index To Financial Statements
|
77
|
* |
We have yet to achieve operating profitability
|
* |
Our continued acquisitions of businesses will likely generate significant depreciation and amortization expense for a significant period of time, thereby reducing future potential profitability
|
* |
We face competition in the markets we currently serve, and many of our competitors have greater market share and financial resources
|
* |
Difficulties managing the growth of our business may adversely affect our financial condition, results of operations and cash
|
* |
Our operations are subject to various governmental regulations that require compliance that can be burdensome, expensive and could adversely affect the feasibility of expanding our operations
|
* |
Our failure to successfully identify, complete and integrate future acquisitions of assets or businesses could reduce future potential earnings, available cash and slow our anticipated growth
|
|
•
|
|
a requirement to have only two years of audited financial statements and only two years of related selected financial data and management's discussion and analysis of financial condition and results of operations disclosure;
|
|
•
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|
an exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002, as amended (the "Sarbanes-Oxley Act");
|
|
•
|
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an exemption from new or revised financial accounting standards until they would apply to private companies and from compliance with any new requirements adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotation;
|
|
•
|
|
reduced disclosure about executive compensation arrangements; and
|
|
•
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no requirement to seek non-binding advisory votes on executive compensation or golden parachute arrangements.
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Issuer
|
Boston Omaha Corporation
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Common stock outstanding immediately before this offering
|
5,841,815
shares
|
Common stock offered by us
|
[_____] shares
|
Common stock sold in the 2017 Concurrent Offering |
[_____] shares
|
Common stock to be outstanding after this offering
|
[_____] shares
|
Class A common stock outstanding before and following this offering
|
1,055,560 shares
|
Option to purchase additional shares
|
We have granted to the underwriters a 30-day option to purchase up to [_____] additional shares of our common stock at the initial public offering price less the underwriting discount and commissions.
|
Use of proceeds
|
We estimate that our net proceeds from this offering, after deducting underwriting discounts and approximately $[___] million of estimated offering expenses, will be approximately $[___] million, assuming the shares are offered at $[___] per share, which is the midpoint of the estimated offering range set forth on the cover page of this prospectus.
We intend to use the net proceeds from this offering for general corporate purposes, which may include additional acquisitions, increasing our reserves for insurance regulatory purposes, and minority investments in other businesses. See "Use of Proceeds."
|
Dividend policy
|
We do not intend to pay dividends for the foreseeable future. The declaration and payment of any future dividends will be at the sole discretion of our board of directors and will depend upon, among other things, our earnings, financial condition, capital requirements, level of indebtedness, contractual restrictions, restrictions imposed by state insurance commissions with respect to payment of dividends, and other considerations that our board of directors deems relevant.
|
Proposed NASDAQ trading symbol
|
"BOMN"
|
Risk factors
|
For a discussion of risks relating to our company, our indebtedness, our business and an investment in our common stock, see "Risk Factors" and all other information set forth in this prospectus before investing in our common stock.
|
Nine months ended
|
Year ended
|
Year ended
|
||||||||||||||||||
September 30, 2016
|
December 31 2015
|
December 31, 2014
|
||||||||||||||||||
|
||||||||||||||||||||
(in thousands, except for per share amounts)
|
Pro forma
|
Actual
|
Pro forma
|
Actual
|
Actual
|
|||||||||||||||
Statement of Operations Data:
|
||||||||||||||||||||
Revenue
|
$
|
4,616
|
$
|
2,550
|
$
|
5,977
|
$
|
723
|
$
|
44
|
||||||||||
Costs of revenue (exclusive of
|
||||||||||||||||||||
depreciation and amortization)
|
2,319
|
874
|
3,222
|
230
|
-
|
|||||||||||||||
Leased employees and professional fees
|
2,210
|
2,114
|
1,714
|
979
|
67
|
|||||||||||||||
Depreciation and amortization
|
1,342
|
1,251
|
1,503
|
458
|
-
|
|||||||||||||||
General and administrative expenses
|
621
|
547
|
471
|
163
|
-
|
|||||||||||||||
Total operating costs and expenses
|
6,492
|
4,786
|
6,910
|
1,830
|
67
|
|||||||||||||||
Operating income (loss)
|
(1,876
|
)
|
(2,236
|
)
|
(933
|
)
|
(1,107
|
)
|
(23
|
)
|
||||||||||
Other income (expense), net
|
(31
|
)
|
(33
|
)
|
88
|
82
|
(16
|
)
|
||||||||||||
Interest expense
|
(4
|
)
|
(2
|
)
|
(54
|
)
|
(22
|
)
|
(28
|
)
|
||||||||||
Total other income (expense)
|
(35
|
)
|
(35
|
)
|
34
|
60
|
(44
|
)
|
||||||||||||
Pre-tax (loss)
|
(1,911
|
)
|
(2,271
|
)
|
(899
|
)
|
(1,047
|
)
|
(67
|
)
|
||||||||||
Provision for income taxes
|
(86
|
)
|
-
|
(8
|
)
|
-
|
-
|
|||||||||||||
Net (loss)
|
$
|
(1,997
|
)
|
$
|
(2,271
|
)
|
$
|
(907
|
)
|
$
|
(1,047
|
)
|
$
|
(67
|
)
|
|||||
Per Share Data
|
||||||||||||||||||||
Net loss per share
|
||||||||||||||||||||
Basic
|
$
|
(0.35
|
)
|
$ | (0.40 | ) |
$
|
(0.61
|
)
|
$ | (0.71 | ) | $ | (0.25 | ) | |||||
Diluted
|
$
|
(0.35
|
)
|
$ | (0.40 | ) |
$
|
(0.61
|
)
|
$ | (0.71 | ) | $ | (0.25 | ) | |||||
Weighted average shares outstanding
|
||||||||||||||||||||
Basic
|
5,744,898
|
5,744,898 |
1,481,310
|
1,481,310 | 266,954 | |||||||||||||||
Diluted
|
5,744,898
|
5,744,898 |
1,481,310
|
1,481,310 | 266,954 | |||||||||||||||
Statement of Cash Flows Data:
|
||||||||||||||||||||
Cash flows from operating activities
|
$
|
(1,098
|
)
|
$
|
(813
|
)
|
$
|
(50
|
)
|
|||||||||||
Cash flows from investing activities
|
(11,476
|
)
|
(10,720
|
)
|
-
|
|||||||||||||||
Cash flows from financing activities
|
41,761
|
24,721
|
24
|
|||||||||||||||||
Balance Sheet Data (at end of period):
|
||||||||||||||||||||
Total assets
|
$
|
63,663
|
$
|
23,785
|
$
|
49
|
||||||||||||||
Long-term payable
|
127
|
-
|
-
|
|||||||||||||||||
Total liabilities
|
571
|
290
|
516
|
|||||||||||||||||
Total stockholders' equity (deficit)
|
63,092
|
23,495
|
(467
|
)
|
* |
seek to acquire related businesses;
|
* |
expand geographically;
|
* |
make significant capital expenditures to support our ability to provide services in our existing businesses; and
|
* |
incur increased general and administrative expenses as we grow.
|
* |
the need to implement or remediate appropriate controls, procedures and policies at companies that, prior to the acquisition, lacked these controls, procedures and policies;
|
* |
disruption of ongoing business, diversion of resources and of management time and focus from operating our business to acquisitions and integration challenges;
|
* |
our ability to achieve anticipated benefits of acquisitions by successfully marketing the service offerings of acquired businesses to our existing partners and customers, or by successfully marketing our existing service offerings to customers and partners of acquired businesses;
|
* |
the negative impact of acquisitions on our results of operations as a result of large one-time charges, substantial debt or liabilities acquired or incurred, amortization or write down of amounts related to deferred compensation, goodwill and other intangible assets, or adverse tax consequences, substantial depreciation or deferred compensation charges;
|
* |
the need to ensure that we comply with all regulatory requirements in connection with and following the completion of acquisitions;
|
* |
the possibility of acquiring unknown or unanticipated contingencies or liabilities;
|
* |
retaining employees and clients and otherwise preserving the value of the assets of the businesses we acquire; and
|
* |
the need to integrate each acquired business's accounting, information technology, human resource and other administrative systems to permit effective management.
|
* |
We may develop products that insure risks we have not previously insured, contain new coverage or coverage terms or contain different commission terms.
|
* |
We may refine our underwriting processes.
|
* |
We may seek to expand distribution channels.
|
* |
We may focus on geographic markets within or outside of the United States where we have had relatively little or no market share.
|
* |
Demand for new products or in new markets may not meet our expectations.
|
* |
To the extent we are able to market new products or expand in new markets, our risk exposures may change, and the data and models we use to manage such exposures may not be as sophisticated or effective as those we use in existing markets or with existing products. This, in turn, could lead to losses in excess of our expectations.
|
* |
Models underlying underwriting and pricing decisions may not be effective.
|
* |
Efforts to develop new products or markets have the potential to create or increase distribution channel conflict.
|
* |
To develop new products or markets, we may need to make substantial capital and operating expenditures, which may also negatively impact results in the near term.
|
|
•
|
|
the requirement that a majority of the board of directors consist of independent directors;
|
|
•
|
|
the requirement that we have director nominees selected or recommended for the board's selection, either by a majority vote of only the independent directors or by a nominations committee comprised solely of independent directors, with a written charter or board resolution addressing the nominations process; and
|
|
•
|
|
the requirement that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee's purpose and responsibilities.
|
|
•
|
|
we are not required to engage an auditor to report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;
|
|
•
|
|
we are not required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis);
|
|
•
|
|
we are not required to submit certain executive compensation matters to stockholder advisory votes, such as "say-on-pay," "say-on-frequency" and "say-on-golden parachutes"; and
|
|
•
|
|
we are not required to disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer's compensation to median employee compensation.
|
* |
success of competitive products or services;
|
* |
regulatory or legal developments in the United States, especially changes in laws or regulations applicable to our products and services;
|
* |
additions or departures of key management personnel;
|
* |
introductions or announcements of new products offered by us or significant acquisitions, strategic partnerships, joint ventures or capital commitments by us or our competitors and the timing of such introductions or announcements;
|
* |
our ability to effectively manage our growth;
|
* |
actual or anticipated changes in estimates to or projections of financial results, development timelines or recommendations by securities analysts;
|
* |
publication of research reports about us or our industry or positive or negative recommendations or withdrawal of research coverage by securities analysts;
|
* |
market conditions in the billboard, insurance, real estate and other sectors in which we may operate as well as general economic conditions;
|
* |
our ability or inability to raise additional capital through the issuance of equity or debt or other arrangements and the terms on which we raise it;
|
* |
trading volume of our common stock;
|
* |
significant lawsuits, including stockholder litigation; and
|
* |
general economic, industry and market conditions.
|
* |
setting forth specific procedures regarding how our stockholders may nominate directors for election at stockholder meetings;
|
* |
permitting our board of directors to issue preferred stock without stockholder approval; and
|
* |
limiting the rights of stockholders to amend our bylaws.
|
|
•
|
|
the competitive nature of the industries in which we conduct our business;
|
|
•
|
|
general business and economic conditions;
|
|
•
|
|
demand for services in our industry;
|
|
•
|
|
our ability to successfully integrate acquired businesses;
|
|
•
|
|
business strategy;
|
|
•
|
|
pricing pressures and competitive factors;
|
|
•
|
|
the effect of a loss of, or financial distress of, any reinsurance company which we rely on for our insurance operations;
|
|
•
|
|
our ability to obtain or renew customer contracts;
|
|
•
|
|
the market price and availability of materials or equipment;
|
|
•
|
|
increased costs as the result of being a public company;
|
|
•
|
|
planned acquisitions and future capital expenditures;
|
|
•
|
|
technology;
|
|
•
|
|
financial strategy, liquidity, capital required for our ongoing operations and acquisitions, and our ability to raise additional capital;
|
|
•
|
|
ability to obtain permits, approvals and authorizations from governmental and third parties, and the effects of government regulation;
|
|
•
|
|
dividends;
|
|
|||
|
•
|
|
future operating results; and
|
|
•
|
|
plans, objectives, expectations and intentions.
|
|
•
|
|
on an actual basis; and
|
|
•
|
|
on a pro forma basis to reflect the 2017 Concurrent Offering and the completion of this offering and the application of the estimated net proceeds from this offering, as described in "Use of Proceeds."
|
September 30, 2016
|
As Adjusted
|
||||
Cash and cash equivalents
|
$
|
42,376
|
|||
Stockholders' equity:
|
|||||
Common stock, $.001 par value, 11,000,000 shares
|
|||||
authorized, 5,841,815 shares issued and outstanding and
|
|||||
[________] shares issued and outstanding on a pro forma basis
|
6
|
||||
Class A common stock, $.001 par value, 1,161,161 shares authorized
|
|||||
1,055,560 shares issued and outstanding on both an actual and pro forma
|
|||||
basis
|
1
|
||||
Additional paid-in capital
|
66,926
|
||||
Deficit
|
(3,841
|
)
|
|||
Total stockholders' equity
|
$
|
63,092
|
|||
Total capitalization
|
$
|
63,092
|
(1)
|
|
A $1.00 increase (decrease) in the assumed initial public offering price of $[___] per share (the midpoint of the price range set forth on the cover of this prospectus) would increase (decrease) additional paid-in capital by $[___] million and increase (decrease) total stockholders' equity by $[___] million, assuming that the underwriters' option to purchase additional shares is not exercised. Similarly, a one million share increase (decrease) in the number of shares offered by us, as set forth on the cover of this prospectus, would increase (decrease) additional paid-in capital by $[____] million, increase (and increase (decrease) total stockholders' equity by $[____] million, assuming that the underwriters' option to purchase shares is not exercised and assuming the initial public offering price of $[___] per share (the midpoint of the price range set forth on the cover of this prospectus) remained the same and after deducting the underwriting discount and estimated offering expenses payable by us.
|
Assumed initial public offering price per share
|
$
|
|||
Pro forma net tangible book value per share as of September 30, 2016 (1)
|
$
|
|||
Increase in net tangible book value per share attributable to investors in this offering and the 2017 Concurrent Offering (2)
|
$
|
|||
Pro forma net tangible book value per share after this offering and the Concurrent Offering
|
$
|
|||
Dilution per share to new investors in this offering
|
$
|
(1)
|
|
Based on the historical book value of the company as of September 30, 2016. This figure is not adjusted by the [$_______] to be received in the 2017 Concurrent Offering and divided by the number of shares of common stock issued and outstanding at September 30, 2016 and increased by the [___] shares of common stock expected to be issued in the 2017 Concurrent Offering but before giving effect to this offering.
|
(2)
|
This figure is adjusted by the [$_______] to be received in the 2017 Concurrent Offering and divided by the number of shares of common stock issued and outstanding at September 30, 2016 and increased by the [____________] shares of common stock expected to be issued in the 2017 Concurrent Offering and after giving effect to this offering.
|
(dollars in thousands)
|
Nine Months Ended
|
Year Ended
|
||||||||||||||
September 30,
|
December 31,
|
|||||||||||||||
Statement of Operations Data
|
2016
|
2015
|
2015
|
2014
|
||||||||||||
Revenue
|
$
|
2,550
|
$
|
359
|
$
|
723
|
$
|
44
|
||||||||
Costs of revenue (exclusive of depreciation and
|
||||||||||||||||
amortization)
|
874
|
167
|
230
|
-
|
||||||||||||
Leased employees and professional fees
|
2,114
|
626
|
979
|
67
|
||||||||||||
Depreciation and amortization
|
1,251
|
211
|
458
|
-
|
||||||||||||
General and administrative expenses
|
547
|
44
|
163
|
-
|
||||||||||||
Total operating costs and expense
|
4,786
|
1,048
|
1,830
|
67
|
||||||||||||
Operating income (loss)
|
(2,236
|
)
|
(689
|
)
|
(1,107
|
)
|
(23
|
)
|
||||||||
Other income (expense), net
|
(33
|
)
|
13
|
82
|
(16
|
)
|
||||||||||
Interest expense
|
(2
|
)
|
(20
|
)
|
(22
|
)
|
(28
|
)
|
||||||||
Total other income (expenses)
|
(35
|
)
|
(7
|
)
|
60
|
(44
|
)
|
|||||||||
Net (loss)
|
$
|
(2,271
|
)
|
$
|
(696
|
)
|
$
|
(1,047
|
)
|
$
|
(67
|
)
|
||||
Balance Sheet Data (at end of period)
|
||||||||||||||||
Total assets
|
$
|
63,663
|
$
|
24,279
|
$
|
23,785
|
$
|
49
|
||||||||
Long-term payable
|
127
|
-
|
-
|
-
|
||||||||||||
Total liabilities
|
571
|
432
|
290
|
516
|
||||||||||||
Total stockholders' equity (deficit)
|
63,092
|
23,847
|
23,495
|
(467
|
)
|
· |
The Company's acquisition of the stock of United Casualty and Surety Insurance Company ("UC&S") and the transactions related thereto
|
· |
The Company's multiple acquisitions of billboards and related assets from Jag, Inc. ("JAG"), Bell Media, LLC, Fair Outdoor, LLC, and I-85 Advertising, LLC.
|
BOSTON OMAHA CORPORATION AND SUBSIDIARIES | ||||||||||||||||||||
UNAUDITED PRO FORMA CONDENSED COMBINED AND CONSOLIDATED BALANCE SHEET
|
||||||||||||||||||||
SEPTEMBER 30, 2016
|
||||||||||||||||||||
Pro Forma
|
Elimination
|
Combined
and
|
||||||||||||||||||
Boston Omaha
|
Adjustments
|
Adjustments
|
Notes
|
Consolidated
|
||||||||||||||||
Current Assets:
|
||||||||||||||||||||
Cash
|
$
|
42,375,758
|
$
|
(11,321,446
|
)
|
(3a)
|
|
$
|
31,054,312
|
|||||||||||
Restricted cash
|
227,943
|
-
|
-
|
227,943
|
||||||||||||||||
Accounts receivable, net
|
469,796
|
674,880
|
-
|
(3a)
|
|
1,144,676
|
||||||||||||||
Investments, short-term
|
-
|
1,394,842
|
-
|
(3a)
|
|
1,394,842
|
||||||||||||||
Prepaid expense and deferred
|
-
|
|||||||||||||||||||
policy acquisition costs
|
377,091
|
434,659
|
-
|
(3a)
|
|
811,750
|
||||||||||||||
Total Current Assets
|
43,450,588
|
(8,817,065
|
)
|
-
|
34,633,523
|
|||||||||||||||
Property and equipment, net
|
8,440,113
|
11,905
|
-
|
(3a)
|
|
8,452,018
|
||||||||||||||
Goodwill
|
7,917,853
|
7,198,930
|
-
|
(3a), (3c)
|
|
15,116,783
|
||||||||||||||
Intangible assets, net
|
2,887,800
|
450,000
|
-
|
(3a), (3c)
|
|
3,337,800
|
||||||||||||||
Investment in subsidiary
|
-
|
5,351,070
|
(5,351,070
|
)
|
(3d)
|
|
-
|
|||||||||||||
Investments, long-term
|
-
|
2,839,725
|
-
|
(3a)
|
|
2,839,725
|
||||||||||||||
Other noncurrent assets
|
966,221
|
1,687,676
|
-
|
(3a)
|
|
2,653,897
|
||||||||||||||
Total Assets
|
$
|
63,662,575
|
$
|
8,722,241
|
$
|
(5,351,070
|
)
|
$
|
67,033,746
|
|||||||||||
Current Liabilities:
|
||||||||||||||||||||
Accounts payable and
|
||||||||||||||||||||
accrued expenses
|
342,505
|
130,285
|
-
|
(3a)
|
|
472,790
|
||||||||||||||
Unearned premiums
|
-
|
1,343,739
|
-
|
(3a)
|
|
1,343,739
|
||||||||||||||
Federal income taxes payable
|
-
|
60,000
|
-
|
(3a)
|
|
60,000
|
||||||||||||||
Funds held as collateral
|
-
|
1,682,147
|
-
|
(3a)
|
|
1,682,147
|
||||||||||||||
Deferred revenue
|
101,536
|
-
|
-
|
101,536
|
||||||||||||||||
Total Current Liabilities
|
444,041
|
3,216,171
|
-
|
3,660,212
|
||||||||||||||||
Long-term payable for acquisition
|
126,500
|
-
|
126,500
|
|||||||||||||||||
Deferred tax liability
|
-
|
155,000
|
-
|
(3a)
|
|
155,000
|
||||||||||||||
Total Liabilities
|
570,541
|
3,371,171
|
-
|
3,941,712
|
||||||||||||||||
Total Stockholders' Equity
|
63,092,034
|
5,351,070
|
(5,351,070
|
)
|
(3d)
|
|
63,092,034
|
|||||||||||||
Total Liabilities and
|
||||||||||||||||||||
Stockholders' Equity
|
$
|
63,662,575
|
$
|
8,722,241
|
$
|
(5,351,070
|
)
|
$
|
67,033,746
|
BOSTON OMAHA CORPORATION AND SUBSIDIARIES | ||||||||||||||||||||
UNAUDITED PRO FORMA CONDENSED COMBINED AND CONSOLIDATED STATEMENT OF OPERATIONS
|
||||||||||||||||||||
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016
|
||||||||||||||||||||
Pro Forma Adjustments
for Acquisitions
|
Combined
and
|
|||||||||||||||||||
Boston Omaha
|
Billboards
|
UC&S
|
Notes
|
Consolidated
|
||||||||||||||||
Revenue
|
$
|
2,550,060
|
$
|
246,221
|
$
|
1,819,641
|
(3b)
|
|
$
|
4,615,922
|
||||||||||
Cost of revenue (exclusive of
|
||||||||||||||||||||
depreciaton and amortization)
|
874,174
|
86,526
|
-
|
(3b)
|
|
960,700
|
||||||||||||||
Underwriting, acquisition
|
||||||||||||||||||||
and insurance expenses
|
-
|
-
|
1,358,578
|
(3b)
|
|
1,358,578
|
||||||||||||||
Employee cost
|
1,140,009
|
95,830
|
-
|
(3b)
|
|
1,235,839
|
||||||||||||||
Professional fees
|
974,214
|
-
|
-
|
974,214
|
||||||||||||||||
Depreciation and amortization
|
1,250,726
|
66,698
|
24,106
|
(3c)
|
|
1,341,530
|
||||||||||||||
General and administrative
|
546,567
|
19,629
|
-
|
(3b)
|
|
566,196
|
||||||||||||||
Losses and loss
|
||||||||||||||||||||
adjustment expenses
|
-
|
-
|
54,993
|
(3b)
|
|
54,993
|
||||||||||||||
Net (Loss) Income from Operations
|
(2,235,630
|
)
|
(22,462
|
)
|
381,964
|
(1,876,128
|
)
|
|||||||||||||
-
|
||||||||||||||||||||
Other income (expense)
|
(32,958
|
)
|
-
|
2,054
|
(3b)
|
|
(30,904
|
)
|
||||||||||||
Interest expense
|
(2,240
|
)
|
(1,593
|
)
|
-
|
(3b)
|
|
(3,833
|
)
|
|||||||||||
(Loss) Income Before Income Tax
|
(2,270,828
|
)
|
(24,055
|
)
|
384,018
|
(1,910,865
|
)
|
|||||||||||||
Income Tax (Provision) Benefit
|
-
|
10,079
|
(96,500
|
)
|
(3f)
|
|
(86,421
|
)
|
||||||||||||
Net (Loss) Income
|
$
|
(2,270,828
|
)
|
$
|
(13,976
|
)
|
$
|
287,518
|
$
|
(1,997,286
|
)
|
|||||||||
Basic and Diluted Net
|
||||||||||||||||||||
(Loss) Income per share
|
$
|
(0.40
|
)
|
(3e)
|
|
$
|
(0.35
|
)
|
||||||||||||
Basic and Diluted Weighted
|
||||||||||||||||||||
Average Shares Outstanding
|
5,744,898
|
(3e)
|
|
5,744,898
|
BOSTON OMAHA CORPORATION AND SUBSIDIARIES | ||||||||||||||||||||
UNAUDITED PRO FORMA CONDENSED COMBINED AND CONSOLIDATED STATEMENT OF OPERATIONS
|
||||||||||||||||||||
FOR THE YEAR ENDED DECEMBER 31, 2015
|
||||||||||||||||||||
Pro Forma Adjustments
for Acquisitions
|
Combined
and
|
|||||||||||||||||||
Boston Omaha
|
Billboards
|
UC&S
|
Notes
|
Consolidated
|
||||||||||||||||
Revenue
|
$
|
722,912
|
$
|
2,553,298
|
$
|
2,701,144
|
(3b)
|
|
$
|
5,977,354
|
||||||||||
Cost of revenue (exclusive of
|
||||||||||||||||||||
depreciaton and amortization)
|
229,507
|
989,968
|
-
|
(3b)
|
|
1,219,475
|
||||||||||||||
Underwriting, acquisition
|
||||||||||||||||||||
and insurance expenses
|
-
|
-
|
2,002,230
|
(3b)
|
|
2,002,230
|
||||||||||||||
Employee cost
|
241,803
|
731,276
|
-
|
(3b)
|
|
973,079
|
||||||||||||||
Professional fees
|
737,451
|
3,537
|
-
|
(3b)
|
|
740,988
|
||||||||||||||
Depreciation and amortization
|
457,803
|
1,013,524
|
32,141
|
(3c)
|
|
1,503,468
|
||||||||||||||
General and administrative
|
163,226
|
288,219
|
-
|
(3b)
|
|
451,445
|
||||||||||||||
Losses and loss
|
||||||||||||||||||||
adjustment expenses
|
-
|
-
|
19,283
|
(3b)
|
|
19,283
|
||||||||||||||
Net (Loss) Income from Operations
|
(1,106,878
|
)
|
(473,226
|
)
|
647,490
|
(932,614
|
)
|
|||||||||||||
Other income (expense)
|
81,963
|
586
|
5,378
|
(3b)
|
|
87,927
|
||||||||||||||
Interest expense
|
(22,508
|
)
|
(31,997
|
)
|
-
|
(3b)
|
|
(54,505
|
)
|
|||||||||||
Net (Loss) Income
|
||||||||||||||||||||
Before Income Tax
|
(1,047,423
|
)
|
(504,637
|
)
|
652,868
|
(899,192
|
)
|
|||||||||||||
Income Tax (Provision) Benefit
|
-
|
211,137
|
(219,200
|
)
|
(3f)
|
|
(8,063
|
)
|
||||||||||||
Net (Loss) Income
|
$
|
(1,047,423
|
)
|
$
|
(293,500
|
)
|
$
|
433,668
|
$
|
(907,255
|
)
|
|||||||||
Basic and Diluted Net
|
||||||||||||||||||||
(Loss) Income per share
|
$
|
(0.71
|
)
|
(3g)
|
|
$
|
(0.61
|
)
|
||||||||||||
Basic and Diluted Weighted
|
||||||||||||||||||||
Average Shares Outstanding
|
1,481,310
|
(3e)
|
|
1,481,310
|
Bell Media LLC
|
June 19, 2015
|
Fair Outdoor, LLC
|
July 23, 2015
|
I-85 Advertising, LLC
|
August 31, 2015
|
|
||||
Cash
|
$
|
1,678,554
|
||
Accounts receivable
|
674,880
|
|||
Investments, short-term
|
1,394,842
|
|||
Prepaid expense
|
99,153
|
|||
Deferred policy acquisition costs
|
335,506
|
|||
Property and equipment
|
11,905
|
|||
Investments, long-term
|
2,839,725
|
|||
Funds held as collateral assets
|
1,682,147
|
|||
Other noncurrent assets
|
5,529
|
|||
Identifiable intangible assets
|
450,000
|
|||
Goodwill
|
7,198,930
|
|||
Accrued expenses
|
(130,285
|
)
|
||
Unearned premiums
|
(1,343,739
|
)
|
||
Federal income taxes payable
|
(60,000
|
)
|
||
Funds held as collateral
|
(1,682,147
|
)
|
||
Deferred tax liability
|
(155,000
|
)
|
||
Total Consideration
|
$
|
13,000,000
|
a. |
Adjustments associated with the acquisition of UC&S
|
b. |
Adjustments associated with the combination of billboard historical amounts and the consolidation of UC&S historical amounts
|
b. |
Adjustments associated with the combination of billboard historical amounts and the consolidation of UC&S historical amounts (continued)
|
Acquisition
|
Period Included
|
|
Jag, Inc. ("Jag")
|
January 1 - December 31, 2015
|
|
I-85 Advertising, LLC ("I-85")
|
January 1 - August 31, 2015
|
|
Fair Outdoor, LLC ("Fair")
|
January 1 - July 23, 2015
|
|
Bell Media LLC ("Bell")
|
January 1 - June 19, 2015
|
Jag
|
I-85
|
Fair
|
Bell
|
Total
|
||||||||||||||||
Revenue
|
$
|
1,671,688
|
$
|
36,000
|
$
|
207,324
|
$
|
638,286
|
$
|
2,553,298
|
||||||||||
Cost of revenue (exclusive of
|
||||||||||||||||||||
depreciaton and amortization)
|
617,252
|
10,738
|
72,713
|
289,265
|
989,968
|
|||||||||||||||
Employee cost
|
731,276
|
-
|
-
|
-
|
731,276
|
|||||||||||||||
Professional fees
|
-
|
1,187
|
2,350
|
-
|
3,537
|
|||||||||||||||
Depreciation and amortization
|
533,580
|
29,593
|
127,926
|
322,425
|
1,013,524
|
|||||||||||||||
General and administrative
|
263,162
|
-
|
529
|
24,528
|
288,219
|
|||||||||||||||
Net (Loss) Income
|
||||||||||||||||||||
from Operations
|
(473,582
|
)
|
(5,518
|
)
|
3,806
|
2,068
|
(473,226
|
)
|
||||||||||||
Other income (expense)
|
586
|
-
|
-
|
-
|
586
|
|||||||||||||||
Interest expense
|
(16,751
|
)
|
-
|
(15,246
|
)
|
-
|
(31,997
|
)
|
||||||||||||
(Loss) Income
|
||||||||||||||||||||
Before Income Tax
|
(489,747
|
)
|
(5,518
|
)
|
(11,440
|
)
|
2,068
|
(504,637
|
)
|
|||||||||||
Income Tax (Provision) Benefit
|
205,221
|
2,235
|
4,519
|
(838
|
)
|
211,137
|
||||||||||||||
Net (Loss) Income
|
$
|
(284,526
|
)
|
$
|
(3,283
|
)
|
$
|
(6,921
|
)
|
$
|
1,230
|
$
|
(293,500
|
)
|
c. |
Adjustments associated with the effects of adjusting the historical book values of assets acquired and liabilities assumed to their estimated fair values, including revised depreciation expense on property and equipment and amortization on newly acquired intangible assets.
|
Nine months
|
||||||||
ended
|
Year ended
|
|||||||
September 30,
|
December 31,
|
|||||||
2016
|
2015
|
|||||||
Billboard acquisitions:
|
||||||||
Depreciation and amortization per
|
||||||||
historical financial statements
|
$
|
5,612
|
$
|
89,438
|
||||
Depreciation and amortization adjustment
|
||||||||
for fair value of assets acquired
|
61,086
|
924,086
|
||||||
Pro forma depreciaton and amortization
|
$
|
66,698
|
$
|
1,013,524
|
||||
UC&S acquisition:
|
||||||||
Depreciation and amortization per
|
||||||||
historical financial statements
|
$
|
10,606
|
$
|
14,141
|
||||
Depreciation and amortization adjustment
|
||||||||
for fair value of assets acquired
|
13,500
|
18,000
|
||||||
Pro forma depreciaton and amortization
|
$
|
24,106
|
$
|
32,141
|
d. |
Adjustments to consolidate the balances of UC&S with the balances of Boston Omaha.
|
e. |
Adjustments for earnings (loss) per share:
|
f. |
Adjustments to provide federal and state income taxes at statutory rates:
|
(dollars in thousands)
|
Nine Months Ended
|
|||||||
September 30,
|
||||||||
Statement of Operations Data
|
2016
|
2015
|
||||||
Revenue
|
$
|
2,550
|
$
|
359
|
||||
Costs of revenue (exclusive of depreciation and
|
||||||||
amortization)
|
874
|
167
|
||||||
Leased employees and professional fees
|
2,114
|
626
|
||||||
Depreciation and amortization
|
1,251
|
211
|
||||||
General and administrative expenses
|
547
|
44
|
||||||
Total operating costs and expense
|
4,786
|
1,048
|
||||||
Operating income (loss)
|
(2,236
|
)
|
(689
|
)
|
||||
Other income (expense), net
|
(33
|
)
|
13
|
|||||
Interest expense
|
(2
|
)
|
(20
|
)
|
||||
Total other income (expenses)
|
(35
|
)
|
(7
|
)
|
||||
Net (loss)
|
$
|
(2,271
|
)
|
$
|
(696
|
)
|
||
Balance Sheet Data (at end of period)
|
||||||||
Total assets
|
$
|
63,663
|
$
|
24,279
|
||||
Long-term payable
|
127
|
-
|
||||||
Total liabilities
|
571
|
432
|
||||||
Total stockholders' equity
|
63,092
|
23,847
|
(dollars in thousands)
|
Year Ended
|
|||||||
December 31,
|
||||||||
Statement of Operations Data
|
2015
|
2014
|
||||||
Revenue
|
$
|
723
|
$
|
44
|
||||
Costs of revenue (exclusive of depreciation and
|
||||||||
amortization)
|
230
|
-
|
||||||
Leased employees and professional fees
|
979
|
67
|
||||||
Depreciation and amortization
|
458
|
-
|
||||||
General and administrative expenses
|
163
|
-
|
||||||
Total operating costs and expense
|
1,830
|
67
|
||||||
Operating income (loss)
|
(1,107
|
)
|
(23
|
)
|
||||
Other income (expense), net
|
82
|
(16
|
)
|
|||||
Interest expense
|
(22
|
)
|
(28
|
)
|
||||
Total other income (expenses)
|
60
|
(44
|
)
|
|||||
Net (loss)
|
$
|
(1,047
|
)
|
$
|
(67
|
)
|
||
Balance Sheet Data (at end of period)
|
||||||||
Total assets
|
$
|
23,785
|
$
|
49
|
||||
Long-term payable
|
-
|
-
|
||||||
Total liabilities
|
290
|
516
|
||||||
Total stockholders' equity
|
23,495
|
(467
|
)
|
Equity in income of Ananda Investments
|
$
|
16,518
|
||
Equity in loss of Logic Real Estate
|
(12,674
|
)
|
||
Equity in loss of TAG SW 1
|
(31
|
)
|
|
Nine months ended September 30,
|
Year ended December 31,
|
||||||||||||||
|
2016
|
2015
|
2015
|
2014
|
||||||||||||
Net cash used in operating activities
|
$
|
(1,098,484
|
)
|
$
|
(543,042
|
)
|
$
|
(813,356
|
)
|
$
|
(49,851
|
)
|
||||
Net cash used in investing activities
|
(11,476,143
|
)
|
(9,924,565
|
)
|
(10,719,702
|
)
|
-
|
|||||||||
Net cash provided by financing activities
|
41,761,319
|
24,720,663
|
24,720,663
|
23,500
|
||||||||||||
Net change in cash
|
$
|
29,186,692
|
$
|
14,253,056
|
$
|
13,187,605
|
$
|
(26,351
|
)
|
|||||||
Structures
|
15 years
|
Digital displays and electrical
|
3 to 10 years
|
Static and tri-vision displays
|
7 to 15 years
|
Vehicles, equipment, and furniture
|
2 to 5 years
|
Customer relationships
|
2 to 3 years
|
Permits, licenses, and lease acquisition costs
|
18 months to 50 years
|
Noncompetition and non-solicitation agreements
|
2 to 5 years
|
Contracts, forms library, domain names, and proprietary software
|
2 to 3 years
|
Name
|
|
Age
|
|
Position(s) |
|
|
|
|
|
Alex B. Rozek
|
|
38
|
|
Co-Chairperson of the Board, President and Co-Chief Executive Officer
|
|
|
|
|
|
Adam K. Peterson
|
|
35
|
|
Co-Chairperson of the Board, Co- Chief Executive Officer and Executive Vice President |
|
|
|
|
|
Joshua P. Weisenburger
|
|
33
|
|
Controller and Chief Accounting Officer and Treasurer |
|
|
|
|
|
Sean Cash
|
|
48
|
|
President of Link Media Holdings, LLC |
|
|
|
|
|
Michael J. Scholl
|
|
49
|
|
President of General Indemnity Group, LLC
|
|
|
|
|
|
Bradford B. Briner |
|
39
|
|
Director |
|
|
|
|
|
Brendan J. Keating
|
|
35
|
|
Director
|
|
•
|
|
the requirement that a majority of the board of directors consist of independent directors;
|
|
•
|
|
the requirement that we have director nominees selected or recommended for the board's selection, either by a majority vote of only the independent directors or by a nominations committee comprised solely of independent directors, with a written charter or board resolution addressing the nominations process; and
|
|
•
|
|
the requirement that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee's purpose and responsibilities.
|
Name and principal position
|
Year
|
Salary ($)
|
Bonus ($)
|
All other
compensation ($)
|
Total ($)
|
Alex B. Rozek
|
2016
|
$23,660
|
-
|
-
|
$23,660
|
Co-Chief Executive Officer and
President
|
2015
|
$9,230
|
-
|
-
|
$9,230
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
|
|
|
|
Adam K. Peterson
|
2016
|
$23,660
|
-
|
-
|
$23,660
|
Co-Chief Executive Officer
and Executive Vice President
|
2015
|
$9,858
|
-
|
-
|
$9,858
|
|
|
|
|
|
|
Jeffrey C. Piermont
|
2016
|
$150,000
|
-
|
-
|
$150,000
|
Chief Administrative Officer and
Treasurer
|
2015
|
$14,787
|
-
|
-
|
$14,787
|
|
|
|
|||
Michael J. Scholl
|
2016
|
$250,000
|
-
|
-
|
$250,000
|
President of General Indemnity
Group, LLC
|
2015
|
$51,915
|
-
|
-
|
$51,915
|
|
•
|
|
the Related Party's interest in the Related Party Transaction;
|
|
•
|
|
the terms of the Related Party Transaction, including the approximate dollar value of the amount involved in the Related Party Transaction and the approximate dollar value of the amount of the Related Party's interest in the transaction without regard to the amount of any profit or loss;
|
|
•
|
|
whether the transaction is being undertaken in the ordinary course of business of the company;
|
|
•
|
|
whether the transaction with the Related Party is proposed to be, or was, entered into on terms no less favorable to the company than terms that could have been reached with an unrelated third party;
|
|
•
|
|
the purpose of, and the potential benefits to the company of, the Related Party Transaction;
|
|
•
|
|
a description of any provisions or limitations imposed as a result of entering into the Related Party Transaction;
|
|
•
|
|
whether the proposed transaction includes any potential reputational risk issues for the company which may arise as a result of or in connection with the Related Party Transaction;
|
|
•
|
|
whether the proposed transaction would violate any requirements of the company's financing or other material agreements; and
|
|
•
|
|
any other relevant information regarding the Related Party Transaction or the Related Party.
|
|
•
|
|
Any employment by the company of an executive officer of the company or any of its subsidiaries if the related compensation conforms with our company's compensation policies and if the executive officer is not a Family Member of another executive officer or of a director of our board; and
|
|
•
|
|
Any compensation paid to a director of our board if the compensation is consistent with the company's bylaws and any compensation policies.
|
|
•
|
|
each person who is known by us to beneficially own 5% or more of our outstanding shares of capital stock;
|
|
•
|
|
each member of our board of directors;
|
|
•
|
|
each of our executive officers named in the Summary Compensation Table under "Executive Compensation"; and
|
|
•
|
|
all of our directors and executive officers as a group.
|
Alex B. Rozek (4)(6)
|
Class A Common
|
580,558
|
50%
|
|
|
|
|
Common
|
726,876
|
12.44%
|
37.43%
|
18.67%
|
|
Brendan J. Keating (7)
|
Common
|
35,000
|
*
|
*
|
*
|
|
Bradford B. Briner (8)
|
Common
|
10,000
|
*
|
*
|
*
|
|
Jeffrey C. Piermont
|
Common
|
4,925
|
*
|
*
|
*
|
|
|
|
|
|
|
|
|
Sean B. Cash
|
|
0
|
*
|
*
|
*
|
|
|
|
|
|
|
|
|
Michael J. Scholl
|
|
0
|
*
|
*
|
*
|
|
All directors and officers as a group (5 persons)
|
Class A Common
|
1,161,116
|
100%
|
|
|
|
|
Common
|
4,670,424
|
79.78%
|
93.23%
|
83.17%
|
|
•
|
|
prior to the date of the transaction, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;
|
|
•
|
|
upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding those shares owned by persons who are directors and also officers and by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or
|
|
•
|
|
on or subsequent to the date of the transaction, the business combination is approved by our board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least two-thirds of the outstanding voting stock which is not owned by the interested stockholder.
|
|
•
|
|
1% of the number of shares of our common stock outstanding at the time of such sale, which will equal [______] shares as of the closing of this offering (assuming that the underwriters' option to purchase additional shares from the selling stockholder is not exercised); or
|
|
•
|
|
the average weekly trading volume of our common stock on the NASDAQ during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale;
|
|
•
|
|
an individual who is a citizen or resident of the United States;
|
|
•
|
|
a corporation organized under the laws of the United States, any state thereof or the District of Columbia;
|
|
•
|
|
an estate the income of which is subject to United States federal income taxation regardless of its source; or
|
|
•
|
|
a trust if it (1) is subject to the primary supervision of a court within the United States and one or more United States persons have the authority to control all substantial decisions of the trust or (2) has a valid election in effect under applicable United States Treasury regulations to be treated as a United States person.
|
|
•
|
|
the gain is effectively connected with a trade or business of the non-U.S. holder in the United States;
|
|
•
|
|
the non-U.S. holder is an individual who is present in the United States for 183 days or more in the taxable year of that disposition, and certain other conditions are met; or
|
|
•
|
|
we are or have been a "United States real property holding corporation" for United States federal income tax purposes.
|
|
Page
|
Report of Independent Registered Public Accounting Firm
|
F-1
|
Consolidated Balance Sheets –December 31, 2015 and December 31, 2014
|
F-2
|
Consolidated Statements of Operations – Years ended December 31, 2015 and December 31, 2014
|
F-3
|
Consolidated Statements of Changes in Stockholders' Equity (Deficit) – Years ended December 31, 2015 and December 31, 2014
|
F-4
|
Consolidated Statements of Cash Flows – Years ended December 31, 2015 and December 31, 2014
|
F-5
|
Notes to Consolidated Financial Statements
|
F-7
|
Page | |
Consolidated Balance Sheet – September 30, 2016 and December 31, 2015 (unaudited)
|
F-25 |
Consolidated Statements of Operations – three and nine months ended September 30, 2016 and 2015 (unaudited)
|
F-26 |
Consolidated Statements of Changes in Stockholders' Equity – September 30, 2016 (unaudited)
|
F-27 |
Consolidated Statements of Cash Flows – nine months ended September 30, 2015 (unaudited)
|
F-28 |
Notes to Consolidated Financial Statements
|
F-30 |
|
Page
|
Report of Independent Registered Public Accounting Firm
|
F-43 |
Balance Sheet –December 31, 2015
|
F-44 |
Statement of Operations – Year ended December 31, 2015
|
F-45 |
Statement of Changes in Stockholder's Deficit – Year ended December 31, 2015
|
F-46 |
Statement of Cash Flows – Year ended December 31, 2015 | F-47 |
Notes to Financial Statements – Year ended December 31, 2015
|
F-48 |
Page | |
Report of Independent Registered Public Accounting Firm
|
F-53 |
Balance Sheets –December 31, 2015 and 2014
|
F-54 |
Statements of Income – Years ended December 31, 2015 and 2014
|
F-55 |
Statements of Changes in Stockholders' Equity – Years ended December 31, 2015 and 2014
|
F-56 |
Statements of Cash Flows – Years ended December 31, 2015 and 2014
|
F-57 |
Notes to Financial Statements
|
F-58 |
Page | |
Balance Sheets – September 30, 2016 and December 31, 2015
|
F-66 |
Statements of Income – Three and Nine Months Ended September 30, 2016 and 2015
|
F-67 |
Statements of Cash Flows – Nine Months Ended September 30, 2016 and 2015
|
F-68 |
Notes to Unaudited Financial Statements
|
F-69 |
Consolidated Balance Sheets | ||||||||
ASSETS
|
||||||||
December 31,
|
||||||||
2015
|
2014
|
|||||||
Current Assets:
|
||||||||
Cash
|
$
|
13,189,066
|
$
|
1,461
|
||||
Accounts receivable, net
|
276,750
|
-
|
||||||
Prepaid expense
|
70,484
|
-
|
||||||
Total Current Assets
|
13,536,300
|
1,461
|
||||||
Property and Equipment:
|
||||||||
Structures and displays
|
4,548,473
|
-
|
||||||
Office Equipment
|
2,633
|
-
|
||||||
Accumulated depreciation
|
(307,367
|
)
|
-
|
|||||
Total Property and Equipment, net
|
4,243,739
|
-
|
||||||
Other Assets:
|
||||||||
Goodwill
|
4,389,664
|
-
|
||||||
Intangible assets, net
|
958,265
|
-
|
||||||
Investment in unconsolidated affiliates
|
657,528
|
47,263
|
||||||
Total Other Assets
|
6,005,457
|
47,263
|
||||||
Total Assets
|
$
|
23,785,496
|
$
|
48,724
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
||||||||
Current Liabilities:
|
||||||||
Accounts payable and accrued expenses
|
$
|
152,672
|
$
|
373
|
||||
Accounts payable, stockholder
|
2,721
|
-
|
||||||
Notes payable, stockholders
|
100,000
|
-
|
||||||
Note payable, former stockholder
|
-
|
494,460
|
||||||
Accrued interest, stockholders
|
4,384
|
-
|
||||||
Accrued interest, former stockholder
|
-
|
21,270
|
||||||
Deferred revenue
|
30,204
|
-
|
||||||
Total Current Liabilities
|
289,981
|
516,103
|
||||||
Commitments
|
-
|
-
|
||||||
Total Liabilities
|
289,981
|
516,103
|
||||||
Stockholders' Equity (Deficit):
|
||||||||
Preferred stock, $.001 par value, 3,000,000 shares
|
||||||||
authorized, 0 shares issued and outstanding
|
-
|
-
|
||||||
Common stock, $.001 par value, 28,700,000 shares
|
||||||||
authorized, 1,716,954 and 266,954 shares
|
||||||||
issued and outstanding, respectively
|
1,717
|
267
|
||||||
Class A common stock, $.001 par value, 1,300,000 shares
|
||||||||
authorized, 1,055,560 and 0 shares issued
|
||||||||
and outstanding, respectively
|
1,056
|
-
|
||||||
Additional paid-in capital
|
25,062,544
|
54,733
|
||||||
Accumulated deficit
|
(1,569,802
|
)
|
(522,379
|
)
|
||||
Total Stockholders' Equity (Deficit)
|
23,495,515
|
(467,379
|
)
|
|||||
Total Liabilities and Stockholders' Equity (Deficit)
|
$
|
23,785,496
|
$
|
48,724
|
Consolidated Statements of Operations
|
||||||||
For the Years Ended
|
||||||||
December 31,
|
||||||||
2015
|
2014
|
|||||||
Revenues:
|
||||||||
Billboard rentals
|
$
|
713,212
|
$
|
-
|
||||
Consulting fees, related party
|
9,700
|
43,874
|
||||||
Total Revenues
|
722,912
|
43,874
|
||||||
Costs and Expenses:
|
||||||||
Cost of revenues (exclusive of depreciation and amortization)
|
229,507
|
-
|
||||||
Professional fees
|
737,451
|
66,715
|
||||||
Depreciation
|
307,367
|
-
|
||||||
Leased employees
|
241,803
|
-
|
||||||
General and administrative
|
153,715
|
-
|
||||||
Amortization
|
150,436
|
-
|
||||||
Bad debt expense
|
9,511
|
-
|
||||||
Total Costs and Expenses
|
1,829,790
|
66,715
|
||||||
Net Loss from Operations
|
(1,106,878
|
)
|
(22,841
|
)
|
||||
Other Income (Expense):
|
||||||||
Equity in income (loss) of unconsolidated affiliates
|
3,813
|
(15,805
|
)
|
|||||
Gain on sale of investment in unconsolidated affiliate
|
78,150
|
-
|
||||||
Interest expense
|
(22,508
|
)
|
(28,132
|
)
|
||||
Net Loss Before Income Tax
|
(1,047,423
|
)
|
(66,778
|
)
|
||||
Income Tax (Provision) Benefit
|
-
|
-
|
||||||
Net Loss
|
$
|
(1,047,423
|
)
|
$
|
(66,778
|
)
|
||
Basic and Diluted Net Loss per Share
|
$
|
(0.71
|
)
|
$
|
(0.25
|
)
|
||
Basic and Diluted Weighted Average Shares Outstanding
|
1,481,310
|
266,954
|
No. of shares
|
||||||||||||||||||||||||||||
Common
Stock
|
Class A
Common
Stock
|
Common
Stock
|
Class A
Common
Stock
|
Additional
Paid-in
Capital
|
Accumulated
Deficit
|
Total
|
||||||||||||||||||||||
Stockholders' (deficit),
|
||||||||||||||||||||||||||||
January 1, 2014
|
266,954
|
-
|
$
|
267
|
$
|
-
|
$
|
54,733
|
$
|
(455,601
|
)
|
$
|
(400,601
|
)
|
||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
-
|
(66,778
|
)
|
(66,778
|
)
|
|||||||||||||||||||
Stockholders' (deficit),
|
||||||||||||||||||||||||||||
December 31, 2014
|
266,954
|
-
|
267
|
-
|
54,733
|
(522,379
|
)
|
(467,379
|
)
|
|||||||||||||||||||
Capital contributions
|
-
|
-
|
-
|
-
|
5,163
|
-
|
5,163
|
|||||||||||||||||||||
Stock and warrants
|
||||||||||||||||||||||||||||
issued for cash
|
1,450,000
|
1,000,000
|
1,450
|
1,000
|
24,497,550
|
-
|
24,500,000
|
|||||||||||||||||||||
Note conversions
|
55,560
|
-
|
56
|
505,098
|
-
|
505,154
|
||||||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
-
|
(1,047,423
|
)
|
(1,047,423
|
)
|
|||||||||||||||||||
Stockholders' equity,
|
||||||||||||||||||||||||||||
December 31, 2015
|
1,716,954
|
1,055,560
|
$
|
1,717
|
$
|
1,056
|
$
|
25,062,544
|
$
|
(1,569,802
|
)
|
$
|
23,495,515
|
Consolidated Statements of Cash Flows
|
||||||||
For the Years Ended
|
||||||||
December 31,
|
||||||||
2015
|
2014
|
|||||||
Cash Flows from Operating Activities:
|
||||||||
Net Loss
|
$
|
(1,047,423
|
)
|
$
|
(66,778
|
)
|
||
Adjustments to reconcile net loss to cash
|
||||||||
used in operating activities:
|
||||||||
Depreciation and amortization
|
457,803
|
-
|
||||||
Bad debts
|
9,511
|
-
|
||||||
Equity in (income) loss of unconsolidated affiliates
|
(3,813
|
)
|
15,805
|
|||||
Gain on sale of investment in unconsolidated affiliate
|
(78,150
|
)
|
-
|
|||||
Changes in operating assets and liabilites:
|
||||||||
Accounts receivable
|
(286,262
|
)
|
-
|
|||||
Prepaid expenses
|
(70,484
|
)
|
3,000
|
|||||
Accounts payable and accrued expenses
|
155,020
|
(6,127
|
)
|
|||||
Accrued interest
|
20,238
|
4,249
|
||||||
Deferred revenue
|
30,204
|
-
|
||||||
Net Cash Used in Operating Activities
|
(813,356
|
)
|
(49,851
|
)
|
||||
Cash Flows from Investing Activities:
|
||||||||
Business acquisitions of structures, displays,
|
||||||||
and intangible assets
|
(9,924,565
|
)
|
-
|
|||||
Purchase of display and equipment
|
(124,905
|
)
|
-
|
|||||
Acquisitions of investments in unconsolidated affiliates
|
(670,232
|
)
|
-
|
|||||
Net Cash Used in Investing Activities
|
(10,719,702
|
)
|
-
|
|||||
Cash Flows from Financing Activities:
|
||||||||
Proceeds from notes payable to stockholders
|
219,000
|
43,500
|
||||||
Payments on notes payable to stockholders
|
(3,500
|
)
|
(20,000
|
)
|
||||
Proceeds from issuance of stock and warrants
|
24,500,000
|
-
|
||||||
Contribution of capital
|
5,163
|
-
|
||||||
Net Cash Provided in Financing Activities
|
24,720,663
|
23,500
|
||||||
Net Increase (Decrease) in Cash
|
13,187,605
|
(26,351
|
)
|
|||||
Cash, Beginning of Year
|
1,461
|
27,812
|
||||||
Cash, End of Year
|
$
|
13,189,066
|
$
|
1,461
|
||||
Interest Paid in Cash
|
$
|
2,270
|
$
|
23,883
|
||||
Income Taxes Paid in Cash
|
$
|
-
|
$
|
-
|
Consolidated Statements of Cash Flows (Continued)
|
||||||||
Supplemental Schedules of Non-cash Investing and Financing Activities
|
||||||||
For the Years Ended
|
||||||||
December 31,
|
||||||||
2015
|
2014
|
|||||||
Restructure of notes payable, stockholders
|
$
|
398,224
|
$
|
-
|
||||
Restructure of note payable, related party
|
135,494
|
-
|
||||||
Notes payable and accrued interest converted
|
||||||||
to Class A common stock
|
505,154
|
-
|
||||||
Distribution from unconsolidated affiliate applied to
|
||||||||
note payable, related party
|
32,000
|
-
|
||||||
Note payable and accrued interest
|
||||||||
exchanged for investment in unconsolidated affiliate
|
109,930
|
-
|
||||||
Decrease in investment in unconsolidated affiliate
|
31,780
|
-
|
Structures
|
15 years
|
Digital displays and electrical
|
3 to 10 years
|
Static and tri-vision displays
|
7 to 15 years
|
Office equipment
|
5 years
|
Customer relationships
|
2 to 3 years
|
Permits, Licenses, and Lease Acquisition Costs
|
10 years
|
Noncompetition and Non-solicitation Agreements
|
2 to 5 years
|
Property and Equipment:
|
||||
Structures and displays
|
$
|
3,468,700
|
||
Intangible Assets:
|
||||
Customer relationships
|
170,000
|
|||
Permits, licenses, and lease acquisition costs
|
200,000
|
|||
Noncompetition and non-solicitation agreements
|
98,000
|
|||
Goodwill
|
2,747,904
|
|||
3,215,904
|
||||
Total
|
$
|
6,684,604
|
Property and Equipment:
|
||||
Structures and displays
|
$
|
370,000
|
||
Intangible Assets:
|
||||
Permits
|
52,200
|
|||
Customer relationships
|
536,300
|
|||
Goodwill
|
986,561
|
|||
1,575,061
|
||||
Total
|
$
|
1,945,061
|
Property and Equipment:
|
||||
Structures and displays
|
$
|
587,500
|
||
Intangible Assets:
|
||||
Easements
|
11,000
|
|||
Permits
|
52,200
|
|||
Goodwill
|
644,200
|
|||
707,400
|
||||
Total
|
$
|
1,294,900
|
For the Years Ended
|
||||||||
December 31,
|
||||||||
2015
|
2014
|
|||||||
Revenue
|
$
|
1,601,093
|
$
|
1,554,123
|
||||
Net (Loss) Income
|
$
|
(1,066,070
|
)
|
$
|
19,576
|
|||
Basic and Diluted
|
||||||||
(Loss) Earnings per Share
|
$
|
(0.72
|
)
|
$
|
0.07
|
|||
Basic and Diluted Weighted
|
||||||||
Average Class A and Common
|
||||||||
Shares Outstanding
|
1,481,310
|
266,954
|
2016
|
2017
|
2018
|
2019
|
2020
|
Thereafter
|
Total
|
||||||||||||||||||||||
Customer relationships
|
$
|
263,749
|
$
|
217,707
|
$
|
104,324
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
585,780
|
||||||||||||||
Permits, licenses and
|
||||||||||||||||||||||||||||
lease acquisition costs
|
30,440
|
30,440
|
30,440
|
30,440
|
30,440
|
137,451
|
289,651
|
|||||||||||||||||||||
Noncompete agreement
|
14,000
|
14,000
|
14,000
|
14,000
|
6,417
|
-
|
62,417
|
|||||||||||||||||||||
Nonsolicitation agreement
|
14,000
|
6,417
|
-
|
-
|
-
|
-
|
20,417
|
|||||||||||||||||||||
$
|
322,189
|
$
|
268,564
|
$
|
148,764
|
$
|
44,440
|
$
|
36,857
|
$
|
137,451
|
$
|
958,265
|
Customer relationships
|
27
|
|||
Permits, licenses and lease acquisition costs
|
114
|
|||
Noncompete agreement
|
53
|
|||
Nonsolicitation agreement
|
18
|
Years Ended
|
||||||||
December 31,
|
||||||||
2015
|
2014
|
|||||||
Rental income
|
$
|
115,612
|
$
|
38,400
|
||||
Net income (loss)
|
$
|
41,294
|
$
|
(39,512
|
)
|
|||
Equity in income (loss) of unconsolidated affiliate
|
$
|
16,518
|
$
|
(15,805
|
)
|
Logic Real Estate Companies, LLC
|
||||
Revenue
|
$
|
501,178
|
||
Gross profit
|
$
|
284,128
|
||
Net (loss)
|
$
|
(258,536
|
)
|
|
Equity in income (loss) of unconsolidated affiliate
|
$
|
(12,674
|
)
|
Revenue
|
$
|
-
|
||
Gross profit
|
$
|
-
|
||
Net (loss)
|
$
|
(207
|
)
|
|
Equity in income (loss) of unconsolidated affiliate
|
$
|
(31
|
)
|
2015
|
2014
|
|||||||
Beginning of year
|
$
|
47,263
|
$
|
63,068
|
||||
Additional investments in unconsolidated affiliates
|
670,232
|
-
|
||||||
Distributions received
|
(32,000
|
)
|
-
|
|||||
Sale of investment in unconsolidated affiliate
|
(31,780
|
)
|
-
|
|||||
Equity in net income (loss) of unconsolidated affiliates
|
3,813
|
(15,805
|
)
|
|||||
End of year
|
$
|
657,528
|
$
|
47,263
|
December 31,
|
||||||||
2015
|
2014
|
|||||||
Note payable to an individual, bearing
|
||||||||
interest at 5% per annum, unsecured,
|
||||||||
principal and interest due February 9, 2017
|
$
|
-
|
$
|
290,960
|
||||
Note payable to an individual, bearing
|
||||||||
interest at 5% per annum, unsecured,
|
||||||||
principal and interest due April 6, 2017
|
-
|
10,000
|
||||||
Note payable to an individual, non-interest
|
||||||||
bearing, unsecured and due on demand
|
-
|
3,500
|
||||||
Note payable to an individual, bearing
|
||||||||
interest at 7% per annum, unsecured,
|
||||||||
interest due quarterly and principal due
|
||||||||
January 1, 2020
|
-
|
190,000
|
||||||
$
|
-
|
$
|
494,460
|
December 31,
|
||||||||
2015
|
2014
|
|||||||
Note payable to a limited liability company,
|
||||||||
bearing interest at 5% per annum, unsecured,
|
||||||||
principal and interst due February 12, 2016
|
$
|
50,000
|
$
|
-
|
||||
Note payable to a limited partnership,
|
||||||||
bearing interest at 5% per annum, unsecured,
|
||||||||
principal and interst due February 12, 2016
|
50,000
|
-
|
||||||
$
|
100,000
|
$
|
-
|
December 31,
|
||||||||
2015
|
2014
|
|||||||
Current tax benefit:
|
||||||||
Federal
|
$
|
443,173
|
$
|
63,572
|
||||
State
|
37,936
|
-
|
||||||
Total
|
481,109
|
63,572
|
||||||
Deferred tax (expense):
|
||||||||
Federal
|
(88,719
|
)
|
-
|
|||||
State
|
(16,914
|
)
|
-
|
|||||
Total
|
(105,633
|
)
|
-
|
|||||
Total Income Tax Benefit Before Valuation Allowance
|
375,476
|
63,572
|
||||||
Valuation allowance
|
(375,476
|
)
|
(63,572
|
)
|
||||
Total Income Tax Benefit
|
$
|
-
|
$
|
-
|
||||
Deferred tax assets:
|
||||||||
Net operating loss carryforward
|
$
|
367,926
|
$
|
63,572
|
||||
Less valuation allowance
|
(367,926
|
)
|
(63,572
|
)
|
||||
$
|
-
|
$
|
-
|
Years Ended
|
||||||||
December 31,
|
||||||||
2015
|
2014
|
|||||||
Federal provision (benefit) at statutory
|
||||||||
graduated tax rates
|
(35.00
|
%)
|
(17.51
|
%)
|
||||
Change in valuation allowance
|
35.00
|
%
|
17.51
|
%
|
||||
0.00
|
%
|
0.00
|
%
|
2016
|
$
|
256,124
|
||
2017
|
256,703
|
|||
2018
|
253,266
|
|||
2019
|
235,939
|
|||
2020
|
217,051
|
|||
Thereafter
|
1,511,063
|
|||
$
|
2,730,146
|
Unaudited
|
||||||||
ASSETS
|
||||||||
September 30,
|
December 31,
|
|||||||
2016
|
2015
|
|||||||
Current Assets:
|
||||||||
Cash
|
$
|
42,375,758
|
$
|
13,189,066
|
||||
Restricted cash
|
227,943
|
-
|
||||||
Accounts receivable, net
|
469,796
|
276,750
|
||||||
Prepaid expense
|
377,091
|
70,484
|
||||||
Total Current Assets
|
43,450,588
|
13,536,300
|
||||||
Property and Equipment:
|
||||||||
Structures and displays
|
9,289,542
|
4,548,473
|
||||||
Vehicles, equipment and furniture
|
112,063
|
2,633
|
||||||
Accumulated depreciation
|
(961,492
|
)
|
(307,367
|
)
|
||||
Total Property and Equipment, net
|
8,440,113
|
4,243,739
|
||||||
Other Assets:
|
||||||||
Goodwill
|
7,917,853
|
4,389,664
|
||||||
Intangible assets, net
|
2,887,800
|
958,265
|
||||||
Investment in unconsolidated affiliates
|
866,221
|
657,528
|
||||||
Convertible note receivable
|
100,000
|
-
|
||||||
Total Other Assets
|
11,771,874
|
6,005,457
|
||||||
Total Assets
|
$
|
63,662,575
|
$
|
23,785,496
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current Liabilities:
|
||||||||
Accounts payable and accrued expenses
|
$
|
342,505
|
$
|
152,672
|
||||
Accounts payable, stockholder
|
-
|
2,721
|
||||||
Notes payable, stockholders
|
-
|
100,000
|
||||||
Accrued interest, stockholders
|
-
|
4,384
|
||||||
Deferred revenue
|
101,536
|
30,204
|
||||||
Total Current Liabilities
|
444,041
|
289,981
|
||||||
Long-term payable for acquisition
|
126,500
|
-
|
||||||
Total Liabilities
|
570,541
|
289,981
|
||||||
Stockholders' Equity:
|
||||||||
Preferred stock, $.001 par value, 1,000,000 shares
|
||||||||
authorized, 0 shares issued and outstanding
|
-
|
-
|
||||||
Common stock, $.001 par value, 11,000,000 shares
|
||||||||
authorized, 5,841,815 and 1,716,954 shares
|
||||||||
issued and outstanding, respectively
|
5,842
|
1,717
|
||||||
Class A common stock, $.001 par value, 1,161,161 shares
|
||||||||
authorized, 1,055,560 shares issued and outstanding
|
1,056
|
1,056
|
||||||
Additional paid-in capital
|
66,925,766
|
25,062,544
|
||||||
Accumulated deficit
|
(3,840,630
|
)
|
(1,569,802
|
)
|
||||
Total Stockholders' Equity
|
63,092,034
|
23,495,515
|
||||||
Total Liabilities and Stockholders' Equity
|
$
|
63,662,575
|
$
|
23,785,496
|
||||
Unaudited
|
||||||||||||||||
For the Three Months Ended
|
For the Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Revenues:
|
||||||||||||||||
Billboard rentals
|
$
|
959,148
|
$
|
349,161
|
$
|
2,273,210
|
$
|
349,161
|
||||||||
Insurance commissions
|
83,089
|
-
|
276,850
|
-
|
||||||||||||
Consulting fees
|
-
|
-
|
-
|
9,700
|
||||||||||||
Total Revenues
|
1,042,237
|
349,161
|
2,550,060
|
358,861
|
||||||||||||
Costs and Expenses:
|
||||||||||||||||
Cost of billboard revenues (exclusive
|
||||||||||||||||
of depreciation and amortization)
|
379,913
|
166,902
|
874,174
|
166,902
|
||||||||||||
Leased employees
|
504,117
|
70,729
|
1,140,009
|
77,391
|
||||||||||||
Professional fees
|
281,719
|
335,322
|
974,214
|
547,867
|
||||||||||||
Depreciation
|
245,787
|
154,427
|
654,125
|
160,842
|
||||||||||||
Amortization
|
255,295
|
34,904
|
596,601
|
50,462
|
||||||||||||
General and administrative
|
159,930
|
36,877
|
517,885
|
44,296
|
||||||||||||
Bad debt expense
|
-
|
-
|
28,682
|
-
|
||||||||||||
Total Costs and Expenses
|
1,826,761
|
799,161
|
4,785,690
|
1,047,760
|
||||||||||||
Net Loss from Operations
|
(784,524
|
)
|
(450,000
|
)
|
(2,235,630
|
)
|
(688,899
|
)
|
||||||||
Other Income (Expense):
|
||||||||||||||||
Equity in income (loss) of
|
||||||||||||||||
unconsolidated affiliate
|
(6,623
|
)
|
4,151
|
(32,958
|
)
|
12,565
|
||||||||||
Interest expense
|
(182
|
)
|
(3,442
|
)
|
(2,240
|
)
|
(19,745
|
)
|
||||||||
Net Loss before Income Tax
|
(791,329
|
)
|
(449,291
|
)
|
(2,270,828
|
)
|
(696,079
|
)
|
||||||||
Income Tax (Provision) Benefit
|
-
|
-
|
-
|
-
|
||||||||||||
Net Loss
|
$
|
(791,329
|
)
|
$
|
(449,291
|
)
|
$
|
(2,270,828
|
)
|
$
|
(696,079
|
)
|
||||
Basic and Diluted Net Loss per Share
|
$
|
(0.11
|
)
|
$
|
(0.18
|
)
|
$
|
(0.40
|
)
|
$
|
(0.67
|
)
|
||||
Basic and Diluted Weighted Average
|
||||||||||||||||
Shares Outstanding
|
6,896,923
|
2,441,536
|
5,744,898
|
1,046,178
|
No. of shares
|
||||||||||||||||||||||||||||
Common
Stock
|
Class A
Common
Stock
|
Comon
Stock
|
Class A
Common
Stock
|
Additional
Paid-in
Capital
|
Accumulated
Deficit
|
Total
|
||||||||||||||||||||||
Stockholders' equity
|
||||||||||||||||||||||||||||
December 31, 2015
|
1,716,954
|
1,055,560
|
$
|
1,717
|
$
|
1,056
|
$
|
25,062,544
|
$
|
(1,569,802
|
)
|
$
|
23,495,515
|
|||||||||||||||
Stock issued for cash
|
4,114,415
|
-
|
4,115
|
-
|
41,757,204
|
-
|
41,761,319
|
|||||||||||||||||||||
Stock issued for notes
|
10,446
|
-
|
10
|
-
|
106,018
|
-
|
106,028
|
|||||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
-
|
(2,270,828
|
)
|
(2,270,828
|
)
|
|||||||||||||||||||
Stockholder's equity
|
||||||||||||||||||||||||||||
September 30, 2016
|
5,841,815
|
1,055,560
|
$
|
5,842
|
$
|
1,056
|
$
|
66,925,766
|
$
|
(3,840,630
|
)
|
$
|
63,092,034
|
Unaudited
|
||||||||
For the Nine Months Ended
|
||||||||
September 30,
|
||||||||
2016
|
2015
|
|||||||
Cash Flows from Operating Activities:
|
||||||||
Net Loss
|
$
|
(2,270,828
|
)
|
$
|
(696,079
|
)
|
||
Adjustments to reconcile net loss to cash
|
||||||||
used in operating activities:
|
||||||||
Depreciation and amortization
|
1,250,726
|
211,304
|
||||||
Bad debt expense
|
28,682
|
-
|
||||||
Equity in loss (income) of unconsolidated affiliates
|
32,958
|
(12,565
|
)
|
|||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(93,503
|
)
|
(226,112
|
)
|
||||
Prepaid expenses
|
(306,607
|
)
|
(57,181
|
)
|
||||
Accounts payable and accrued expenses
|
187,112
|
214,116
|
||||||
Accrued interest
|
1,644
|
17,475
|
||||||
Deferred revenue
|
71,332
|
6,000
|
||||||
Net Cash Used in Operating Activities
|
(1,098,484
|
)
|
(543,042
|
)
|
||||
Cash Flows from Investing Activities:
|
||||||||
Deposits to restricted cash
|
(227,943
|
)
|
-
|
|||||
Purchase of equipment
|
(504,597
|
)
|
-
|
|||||
Business acquisitions, net of cash acquired
|
(10,401,952
|
)
|
(9,924,565
|
)
|
||||
Acquisition of investment in unconsolidated affiliate
|
(258,166
|
)
|
-
|
|||||
Distributions from unconsolidated affiliates
|
16,515
|
-
|
||||||
Purchase of convertible note receivable
|
(100,000
|
)
|
-
|
|||||
Net Cash Used in Investing Activities
|
(11,476,143
|
)
|
(9,924,565
|
)
|
||||
Cash Flows from Financing Activities:
|
||||||||
Proceeds from notes payable to stockholders
|
-
|
219,000
|
||||||
Payments on notes payable to stockholders
|
-
|
(3,500
|
)
|
|||||
Proceeds from issuance of stock
|
41,761,319
|
24,500,000
|
||||||
Contribution of capital
|
-
|
5,163
|
||||||
Net Cash Provided by Financing Activities
|
41,761,319
|
24,720,663
|
||||||
Net Increase in Cash
|
29,186,692
|
14,253,056
|
||||||
Cash, Beginning of Period
|
13,189,066
|
1,461
|
||||||
Cash, End of Period
|
$
|
42,375,758
|
$
|
14,254,517
|
||||
Interest Paid in Cash
|
$
|
596
|
$
|
2,270
|
||||
Income Taxes Paid in Cash
|
$
|
-
|
$
|
-
|
Supplemental Schedules of Non-cash Financing Activities
|
||||||||
Unaudited
|
||||||||
For the Nine Months Ended
|
||||||||
September 30,
|
||||||||
2016
|
2015
|
|||||||
Restructure of notes payable, stockholders
|
$
|
-
|
$
|
398,224
|
||||
Restructure of note payable, former stockholder
|
-
|
135,494
|
||||||
Payables due on acquisitions
|
126,500
|
-
|
||||||
Notes payable and accrued interest converted
|
||||||||
to common stock
|
106,028
|
505,154
|
||||||
Distribution from unconsolidated
|
||||||||
affiliate applied to note payable,
|
||||||||
former stockholder
|
-
|
32,000
|
Structures
|
15 years
|
Digital displays and electrical
|
3 to 10 years
|
Static and tri-vision displays
|
7 to 15 years
|
Vehicles, equipment, and furniture
|
2 to 5 years
|
Customer relationships
|
2 to 3 years
|
Permits, licenses, and lease acquisition costs
|
18 months to 50 years
|
Noncompetition and non-solicitation agreements
|
2 to 5 years
|
Contracts, forms library, domain names, and proprietary software
|
2 to 3 years
|
Property and Equipment:
|
||||
Structures and displays
|
$
|
3,252,940
|
||
Vehicles, tools and equipment
|
79,737
|
|||
Total Property and Equipment
|
3,332,677
|
|||
Intangible Assets:
|
||||
Customer relationships
|
694,400
|
|||
Permits and lease acquisition costs
|
589,491
|
|||
Noncompetition agreement
|
104,300
|
|||
Easement
|
55,000
|
|||
Goodwill
|
2,072,038
|
|||
Total Intangible Assets
|
3,515,229
|
|||
Accounts receivable
|
106,340
|
|||
Total
|
$
|
6,954,246
|
Property and Equipment:
|
||||
Office furniture and equipment
|
$
|
20,325
|
||
Intangible Assets:
|
||||
Insurance contracts and licenses
|
281,500
|
|||
Domain names
|
78,050
|
|||
Proprietary software and bond form library
|
292,800
|
|||
Goodwill
|
592,325
|
|||
Total Intangible Assets
|
1,244,675
|
|||
Cash
|
80,000
|
|||
Total
|
$
|
1,345,000
|
Property and Equipment:
|
||||
Structures and displays
|
$
|
762,900
|
||
Intangible Assets:
|
||||
Customer relationships
|
427,731
|
|||
Permits
|
16,600
|
|||
Noncompetition agreement
|
15,164
|
|||
Goodwill
|
777,605
|
|||
Total Intangible Assets
|
1,237,100
|
|||
Accounts receivable
|
21,885
|
|||
Total
|
$
|
2,021,885
|
Pro Forma Information
|
||||||||||||||||
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Revenue
|
$
|
1,042,237
|
$
|
1,170,244
|
$
|
3,359,015
|
$
|
3,201,935
|
||||||||
Net Income (Loss)
|
$
|
(791,329
|
)
|
$
|
(502,241
|
)
|
$
|
(2,277,900
|
)
|
$
|
(1,290,598
|
)
|
||||
Basic and Diluted Earnings
|
||||||||||||||||
(Loss) per Share
|
$
|
(0.11
|
)
|
$
|
(0.21
|
)
|
$
|
(0.40
|
)
|
$
|
(1.23
|
)
|
||||
Basic and Diluted Weighted
|
||||||||||||||||
Average Class A and Common
|
||||||||||||||||
Shares Outstanding
|
6,896,923
|
2,441,536
|
5,744,898
|
1,046,178
|
September 30, 2016
|
December 31, 2015
|
|||||||||||||||||||||||
Accumulated
|
Accumulated
|
|||||||||||||||||||||||
Cost
|
Amortization
|
Balance
|
Cost
|
Amortization
|
Balance
|
|||||||||||||||||||
Customer relationships
|
$
|
1,828,431
|
$
|
(510,506
|
)
|
$
|
1,317,925
|
$
|
706,300
|
$
|
(120,520
|
)
|
$
|
585,780
|
||||||||||
Permits, licenses, and lease acquistion costs
|
964,591
|
(76,575
|
)
|
888,016
|
304,400
|
(14,748
|
)
|
289,652
|
||||||||||||||||
Noncompete agreements
|
189,464
|
(32,132
|
)
|
157,332
|
70,000
|
(7,583
|
)
|
62,417
|
||||||||||||||||
Insurance contracts and domain names
|
331,550
|
(69,073
|
)
|
262,477
|
-
|
-
|
-
|
|||||||||||||||||
Proprietary software
|
280,800
|
(39,000
|
)
|
241,800
|
-
|
-
|
-
|
|||||||||||||||||
Bond form library
|
12,000
|
(1,667
|
)
|
10,333
|
-
|
-
|
-
|
|||||||||||||||||
Non-solicitation agreement
|
28,000
|
(18,083
|
)
|
9,917
|
28,000
|
(7,584
|
)
|
20,416
|
||||||||||||||||
$
|
3,634,836
|
$
|
(747,036
|
)
|
$
|
2,887,800
|
$
|
1,108,700
|
$
|
(150,435
|
)
|
$
|
958,265
|
September 30,
|
||||||||||||||||||||||||||||
2017
|
2018
|
2019
|
2020
|
2021
|
Thereafter
|
Total
|
||||||||||||||||||||||
Customer
relationships |
$
|
612,964
|
$
|
552,755
|
$
|
152,206
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
1,317,925
|
||||||||||||||
Permits, licenses and lease acquisition costs
|
99,832
|
82,721
|
81,165
|
81,165
|
81,165
|
461,968
|
888,016
|
|||||||||||||||||||||
Noncompete agreements
|
37,893
|
37,893
|
37,892
|
33,810
|
9,844
|
-
|
157,332
|
|||||||||||||||||||||
Insurance contracts
|
165,775
|
96,702
|
-
|
-
|
-
|
-
|
262,477
|
|||||||||||||||||||||
Proprietary software
|
93,600
|
93,600
|
54,600
|
-
|
-
|
-
|
241,800
|
|||||||||||||||||||||
Bond form library
|
4,000
|
4,000
|
2,333
|
-
|
-
|
-
|
10,333
|
|||||||||||||||||||||
Nonsolicitation agreement
|
9,917
|
9,917
|
||||||||||||||||||||||||||
$
|
1,023,981
|
$
|
867,671
|
$
|
328,196
|
$
|
114,975
|
$
|
91,009
|
$
|
461,968
|
$
|
2,887,800
|
Customer relationships
|
25
|
Permits, licenses, and lease acquisition costs
|
107
|
Non-compete agreements
|
50
|
Insurance contracts and domain names
|
19
|
Proprietary software
|
31
|
Bond form library
|
31
|
Nonsolicitation agreement
|
9
|
September 30, | December 31, | |||||||
2016
|
2015
|
|||||||
Beginning of year
|
$
|
657,528
|
$
|
47,263
|
||||
Additional investments in unconsolidated affiliates
|
258,166
|
670,232
|
||||||
Distributions received
|
(16,515
|
)
|
(32,000
|
)
|
||||
Sale of investment in unconsolidated affiliate
|
-
|
(31,780
|
)
|
|||||
Equity in net income (loss) of unconsolidated affiliates
|
(32,958
|
)
|
3,813
|
|||||
End of period
|
$
|
866,221
|
$
|
657,528
|
September 30,
|
December 31,
|
|||||||
2016
|
2015
|
|||||||
Note payable to a limited liability company,
|
||||||||
bearing interest at 5% per annum, unsecured,
|
||||||||
prinicpal and interest due February 12, 2016
|
$
|
-
|
$
|
50,000
|
||||
Note payable to a limited partnership,
|
||||||||
bearing interest at 5% per annum, unsecured,
|
|
|
||||||
principal and interest due February 12, 2016
|
- |
50,000
|
||||||
$
|
-
|
$
|
100,000
|
2017
|
$
|
591,837
|
||
2018
|
546,866
|
|||
2019
|
509,418
|
|||
2020
|
474,982
|
|||
2021
|
448,819
|
|||
Thereafter
|
2,527,708
|
|||
$
|
5,099,630
|
Total
|
||||||||||||||||
Nine Months Ended September 30, 2016
|
GIG
|
LMH
|
Unallocated
|
Consolidated
|
||||||||||||
Revenue
|
$
|
276,850
|
$
|
2,273,210
|
$
|
-
|
$
|
2,550,060
|
||||||||
Segment loss from operations
|
(480,585
|
)
|
(663,387
|
)
|
(1,091,658
|
)
|
(2,235,630
|
)
|
||||||||
Capital expenditures
|
1,265,000
|
9,639,824
|
-
|
10,904,824
|
||||||||||||
Depreciation and amortization
|
119,926
|
1,130,800
|
-
|
1,250,726
|
||||||||||||
Total
|
||||||||||||||||
Nine Months Ended September 30, 2015
|
GIG
|
LMH
|
Unallocated
|
Consolidated
|
||||||||||||
Revenue
|
$
|
-
|
$
|
349,161
|
$
|
9,700
|
$
|
358,861
|
||||||||
Segment loss from operations
|
-
|
(206,737
|
)
|
(482,162
|
)
|
(688,899
|
)
|
|||||||||
Capital expenditures
|
-
|
9,924,565
|
-
|
9,924,565
|
||||||||||||
Depreciation and amortization
|
-
|
211,304
|
-
|
211,304
|
||||||||||||
Total
|
||||||||||||||||
Three Months Ended September 30, 2016
|
GIG
|
LMH
|
Unallocated
|
Consolidated
|
||||||||||||
Revenue
|
$
|
83,089
|
$
|
959,148
|
- |
$
|
1,042,237
|
|||||||||
Segment loss from operations
|
(237,342
|
)
|
(203,649
|
)
|
(343,533
|
)
|
(784,524
|
)
|
||||||||
Capital expenditures
|
-
|
445,451
|
- |
445,451
|
||||||||||||
Depreciation and amortization
|
71,851
|
429,231
|
- |
501,082
|
||||||||||||
Total
|
||||||||||||||||
Three Months Ended September 30, 2015
|
GIG
|
LMH
|
Unallocated
|
Consolidated
|
||||||||||||
Revenue
|
$
|
-
|
$
|
349,161
|
$
|
-
|
$
|
349,161
|
||||||||
Segment loss from operations
|
- |
(174,776
|
)
|
(275,224
|
)
|
(450,000
|
)
|
|||||||||
Capital expenditures
|
-
|
3,239,961
|
-
|
3,239,961
|
||||||||||||
Depreciation and amortization
|
-
|
189,331
|
-
|
189,331
|
||||||||||||
Total
|
||||||||||||||||
As of September 30, 2016
|
GIG
|
LMH
|
Unallocated
|
Consolidated
|
||||||||||||
Goodwill
|
$
|
592,325
|
$
|
7,325,528
|
$
|
-
|
$
|
7,917,853
|
||||||||
Total assets
|
1,653,998
|
19,371,609
|
42,636,968
|
63,662,575
|
||||||||||||
Total
|
||||||||||||||||
As of September 30, 2015
|
GIG
|
LMH
|
Unallocated
|
Consolidated
|
||||||||||||
Goodwill
|
$
|
-
|
$
|
3,742,465
|
$
|
-
|
$
|
3,742,465
|
||||||||
Total assets
|
-
|
10,094,712
|
14,184,187
|
24,278,899
|
Balance Sheet
|
||||
December 31, 2015
|
||||
ASSETS
|
||||
Current Assets:
|
||||
Cash
|
$
|
40,876
|
||
Accounts receivable, net
|
86,450
|
|||
Prepaid expense
|
43,673
|
|||
Total Current Assets
|
170,999
|
|||
Property and Equipment:
|
||||
Structures and displays
|
1,270,912
|
|||
Land,building and improvements
|
14,950
|
|||
Vehicles and equipment
|
539,741
|
|||
Accumulated depreciation
|
(1,625,747
|
)
|
||
Total Property and Equipment, net
|
199,856
|
|||
Total Assets
|
$
|
370,855
|
||
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
||||
Current Liabilities:
|
||||
Accounts payable and accrued expenses
|
$
|
42,692
|
||
Deferred compensation payable
|
317,756
|
|||
Deferred revenue
|
50,433
|
|||
Note payable, related party
|
70,000
|
|||
Current portion of long-term debt, including related party debt of $24,200
|
94,650
|
|||
Total Current Liabilities
|
575,531
|
|||
Long-term debt, including related party debt of $78,602
|
285,627
|
|||
Total Liabilities
|
861,158
|
|||
Stockholders' Deficit:
|
||||
Common stock, no par value, 17,000 shares authorized, 6,220 shares issued and outstanding
|
18,056
|
|||
Treasury stock
|
(232,412
|
)
|
||
Accumulated deficit
|
(275,947
|
)
|
||
Total Stockholders' Deficit
|
(490,303
|
)
|
||
Total Liabilities and Stockholders' Deficit
|
$
|
370,855
|
||
Statement of Operations
|
||||
For the Year Ended December 31, 2015
|
||||
Revenues:
|
||||
Billboard rentals
|
$
|
1,518,693
|
||
Service income
|
152,995
|
|||
Total Revenues
|
1,671,688
|
|||
Costs and Expenses:
|
||||
Cost of revenues (exclusive of depreciation)
|
617,252
|
|||
Salaries, taxes, and benefits
|
731,276
|
|||
General and administrative
|
195,575
|
|||
Rent, related party
|
66,000
|
|||
Depreciation
|
64,098
|
|||
Bad debt expense
|
1,588
|
|||
Total Costs and Expenses
|
1,675,789
|
|||
Net Loss from Operations
|
(4,101
|
)
|
||
Other Income (Expense):
|
||||
Interest income
|
586
|
|||
Interest expense
|
(16,751
|
)
|
||
Net Loss
|
$
|
(20,266
|
)
|
Statement of Changes in Stockholders' Deficit
|
||||||||||||||||||||||||
No. of shares
|
||||||||||||||||||||||||
Common
Stock
|
Treasury
Stock
|
Common
Stock
|
Treasury
Stock
|
Accumulated
Deficit
|
Total
|
|||||||||||||||||||
Balance,
|
||||||||||||||||||||||||
January 1, 2015
|
6,220
|
3,880
|
$
|
18,056
|
$
|
(232,412
|
)
|
$
|
(247,594
|
)
|
$
|
(461,950
|
)
|
|||||||||||
Net loss
|
-
|
-
|
-
|
-
|
(20,266
|
)
|
(20,266
|
)
|
||||||||||||||||
Dividends paid
|
-
|
-
|
-
|
-
|
(8,087
|
)
|
(8,087
|
)
|
||||||||||||||||
Balance,
|
||||||||||||||||||||||||
December 31, 2015
|
6,220
|
3,880
|
$
|
18,056
|
$
|
(232,412
|
)
|
$
|
(275,947
|
)
|
$
|
(490,303
|
)
|
|||||||||||
Statement of Cash Flows
|
||||
For the Year Ended December 31, 2015
|
||||
Cash Flows from Operating Activities:
|
||||
Net Loss
|
$
|
(20,266
|
)
|
|
Adjustments to reconcile net loss to cash used in operating activities:
|
||||
Depreciation
|
64,098
|
|||
Bad debts
|
1,588
|
|||
Changes in operating assets and liabilities:
|
||||
Accounts receivable
|
(35,314
|
)
|
||
Prepaid expense
|
(10,274
|
)
|
||
Accounts payable and accrued expenses
|
(60,979
|
)
|
||
Deferred compensation payable
|
41,571
|
|||
Deferred revenue
|
(3,902
|
)
|
||
Net Cash Used in Operating Activities
|
(23,478
|
)
|
||
Cash Flows From Investing Activities:
|
||||
Purchases of structures and displays
|
(45,211
|
)
|
||
Leasehold improvements
|
(999
|
)
|
||
Purchases of vehicles and equipment
|
(2,266
|
)
|
||
Net Cash Used in Investing Activities
|
(48,476
|
)
|
||
Cash Flows from Financing Activities:
|
||||
Proceeds from notes payable
|
318,180
|
|||
Payments on notes payable
|
(274,695
|
)
|
||
Payments on note payable, related party
|
(23,340
|
)
|
||
Dividends paid
|
(8,087
|
)
|
||
Net Cash Provided in Financing Activities
|
12,058
|
|||
Net Decrease in Cash
|
(59,896
|
)
|
||
Cash, Beginning of Year
|
100,772
|
|||
Cash, End of Year
|
$
|
40,876
|
||
Interest Paid in Cash
|
$
|
16,751
|
||
Income Taxes Paid in Cash
|
$
|
-
|
||
Building and leasehold improvements
|
7 to 15 years
|
Billboard structures and displays
|
5 to 15 years
|
Equipment
|
5 to 7 years
|
Vehicles
|
5 years
|
Maturities of long-term debt are as follows:
|
||||
2016
|
$
|
94,650
|
||
2017
|
123,550
|
|||
2018
|
96,677
|
|||
2019
|
65,400
|
|||
$
|
380,277
|
2016
|
$
|
319,215
|
||
2017
|
205,229
|
|||
2018
|
172,277
|
|||
2019
|
148,359
|
|||
2020
|
129,693
|
|||
Thereafter
|
504,942
|
|||
$
|
1,479,715
|
UNITED CASUALTY AND SURETY INSURANCE COMPANY
|
||
BALANCE SHEETS
|
||
DECEMBER 31, 2015 AND 2014
|
UNITED CASUALTY AND SURETY INSURANCE COMPANY
|
||
STATEMENTS OF INCOME
|
||
YEARS ENDED DECEMBER 31, 2015 AND 2014
|
2015
|
2014
|
|||||||
OPERATING REVENUES:
|
||||||||
Premiums earned
|
$
|
2,585,127
|
$
|
2,383,071
|
||||
Salvage and subrogation
|
19,276
|
86,989
|
||||||
Net investment income
|
96,741
|
82,897
|
||||||
Total Operating Revenues
|
2,701,144
|
2,552,957
|
||||||
OPERATING EXPENSES:
|
||||||||
Underwriting, acquisition and insurance expenses
|
2,002,230
|
1,883,403
|
||||||
Losses and loss adjustment expenses
|
19,283
|
99,840
|
||||||
Other (income) expense
|
(5,378
|
)
|
(1,612
|
)
|
||||
Depreciation and amortization expense
|
14,141
|
13,525
|
||||||
Total Operating Expenses
|
2,030,276
|
1,995,156
|
||||||
INCOME BEFORE FEDERAL INCOME TAXES
|
670,868
|
557,801
|
||||||
FEDERAL INCOME TAXES
|
219,200
|
216,300
|
||||||
NET INCOME
|
$
|
451,668
|
$
|
341,501
|
||||
The accompanying notes are an integral part of the financial statements.
|
UNITED CASUALTY AND SURETY INSURANCE COMPANY
|
|||||
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
|
|||||
YEARS ENDED DECEMBER 31, 2015 AND 2014
|
Additional
|
Total
|
|||||||||||||||||||
Common Stock
|
Paid-in
|
Retained
|
Stockholders'
|
|||||||||||||||||
Shares
|
Amount
|
Capital
|
Earnings
|
Equity
|
||||||||||||||||
BALANCE, JANUARY 1, 2014
|
14,484
|
$
|
1,086,300
|
$
|
1,459,445
|
$
|
2,286,133
|
$
|
4,831,878
|
|||||||||||
Dividend declared
|
-
|
-
|
-
|
(174,998
|
)
|
(174,998
|
)
|
|||||||||||||
Net income
|
-
|
-
|
-
|
341,501
|
341,501
|
|||||||||||||||
BALANCE, DECEMBER 31, 2014
|
14,484
|
1,086,300
|
1,459,445
|
2,452,636
|
4,998,381
|
|||||||||||||||
Dividend declared
|
-
|
-
|
-
|
(299,997
|
)
|
(299,997
|
)
|
|||||||||||||
Net income
|
-
|
-
|
-
|
451,668
|
451,668
|
|||||||||||||||
BALANCE, DECEMBER 31, 2015
|
14,484
|
$
|
1,086,300
|
$
|
1,459,445
|
$
|
2,604,307
|
$
|
5,150,052
|
|||||||||||
The accompanying notes are an integral part of the financial statements.
|
UNITED CASUALTY AND SURETY INSURANCE COMPANY
|
||
STATEMENTS OF CASH FLOWS
|
||
YEARS ENDED DECEMBER 31, 2015 AND 2014
|
2015
|
2014
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net income
|
$
|
451,668
|
$
|
341,501
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Deferred income tax expense
|
8,000
|
5,000
|
||||||
Depreciation and amortization
|
14,141
|
13,525
|
||||||
Amortization of held to maturity investments
|
3,279
|
5,940
|
||||||
Change in carrying value of certificates of deposit
|
(59,032
|
)
|
(55,669
|
)
|
||||
Changes in operating assets and liabilities:
|
||||||||
Decrease (increase) in receivables
|
39,122
|
(15,686
|
)
|
|||||
Increase in prepaid reinsurance premiums
|
(7,443
|
)
|
(907
|
)
|
||||
Increase in deferred policy acquisition costs
|
(27,836
|
)
|
(18,167
|
)
|
||||
Increase in accrued underwriting expenses
|
3,843
|
14,232
|
||||||
Increase in unearned premiums
|
89,923
|
47,979
|
||||||
Increase in accrued losses and loss adjustment expenses
|
2,000
|
1,000
|
||||||
Decrease in federal income taxes payable
|
(12,500
|
)
|
(22,500
|
)
|
||||
Net cash provided by operating activities
|
505,165
|
316,248
|
||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Purchase of fixed assets
|
-
|
(3,707
|
)
|
|||||
Proceeds from the sale of investments
|
497,138
|
1,502,601
|
||||||
Investment purchases
|
(740,000
|
)
|
(1,825,000
|
)
|
||||
Net cash used in investing activities
|
(242,862
|
)
|
(326,106
|
)
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Cash dividends paid to stockholders
|
(225,741
|
)
|
(272,319
|
)
|
||||
Net cash used in financing activities
|
(225,741
|
)
|
(272,319
|
)
|
||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
36,562
|
(282,177
|
)
|
|||||
CASH AND CASH EQUIVALENTS:
|
||||||||
Beginning of year
|
848,047
|
1,130,224
|
||||||
End of year
|
$
|
884,609
|
$
|
848,047
|
||||
NONCASH CHANGE IN FINANCING ACTIVITIES:
|
||||||||
Dividends declared but not paid
|
$
|
74,256
|
$
|
-
|
||||
SUPPLEMENTAL DISCLOSURES:
|
||||||||
Interest paid
|
$
|
-
|
$
|
-
|
||||
Federal income taxes paid
|
$
|
223,700
|
$
|
233,800
|
||||
The accompanying notes are an integral part of the financial statements.
|
1. | BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
1. | BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) |
1. | BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) |
December 31, 2015
|
||||||||||||||||
Amortized Cost/ Carrying Value
|
Gross Unrealized Gains
|
Gross Unrealized Loss
|
Estimated Fair Value
|
|||||||||||||
U.S. Treasury securities
|
$
|
814,620
|
$
|
6,295
|
$
|
-
|
$
|
820,915
|
||||||||
Certificates of deposit, less than 12 months*
|
1,766,686
|
-
|
-
|
1,761,240
|
||||||||||||
Certificates of deposit, greater than 12 months*
|
2,532,241
|
-
|
-
|
2,532,241
|
||||||||||||
Total investments, held-to-maturity
|
5,113,547
|
$
|
6,295
|
$
|
-
|
$
|
5,114,396
|
|||||||||
Amount reported as investments, short-term
|
1,766,686
|
|||||||||||||||
Investments, long-term
|
$
|
3,346,861
|
||||||||||||||
December 31, 2014
|
||||||||||||||||
Amortized Cost/ Carrying Value
|
Gross Unrealized Gains
|
Gross Unrealized Loss
|
Estimated Fair Value
|
|||||||||||||
U.S. Treasury securities
|
$
|
817,899
|
$
|
14,065
|
$
|
-
|
$
|
831,964
|
||||||||
Certificates of deposit, less than 12 months*
|
523,716
|
-
|
-
|
497,138
|
||||||||||||
Certificates of deposit, greater than 12 months*
|
3,473,317
|
-
|
-
|
3,473,317
|
||||||||||||
Total investments, held-to-maturity
|
4,814,932
|
$
|
14,065
|
$
|
-
|
$
|
4,802,419
|
|||||||||
Amount reported as investments, short-term
|
523,716
|
|||||||||||||||
Investments, long-term
|
$
|
4,291,216
|
||||||||||||||
* Certificates of deposit are stated at carrying value which estimates fair value.
|
3. | DEFERRED POLICY ACQUISITION COSTS |
2015
|
2014
|
|||||||
Deferred policy acquisition costs, beginning of year
|
$
|
261,976
|
$
|
243,809
|
||||
Policy acquisition costs deferred
|
665,884
|
593,945
|
||||||
Policy acquisition costs expensed
|
(638,048
|
)
|
(575,778
|
)
|
||||
Deferred policy acquisition costs, end of year
|
$
|
289,812
|
$
|
261,976
|
2015
|
2014
|
|||||||
Policy acquisition costs expensed
|
$
|
638,048
|
$
|
575,778
|
||||
Payroll and payroll taxes
|
844,897
|
810,573
|
||||||
Other operating expenses
|
519,285
|
497,052
|
||||||
Underwriting, acquisition and insurance expenses
|
$
|
2,002,230
|
$
|
1,883,403
|
4. | PROPERTY AND EQUIPMENT |
|
2015
|
2014
|
||||||
Equipment
|
$
|
80,667
|
$
|
80,667
|
||||
Furniture and fixtures
|
40,266
|
40,266
|
||||||
Leasehold improvements
|
24,265
|
24,265
|
||||||
145,198
|
145,198
|
|||||||
Accumulated depreciation and amortization
|
(122,687
|
) |
(108,546
|
) | ||||
Property and equipment, net
|
$
|
22,511
|
$
|
36,652
|
5. | LIABILITY FOR ACCRUED LOSSES AND LOSS ADJUSTMENT EXPENSES |
2015
|
2014
|
|||||||
Balance at January 1:
|
$
|
20,000
|
$
|
19,000
|
||||
Incurred related to current year
|
2,000
|
1,000
|
||||||
Balance at December 31:
|
$
|
22,000
|
$
|
20,000
|
6. | FEDERAL INCOME TAXES |
2015
|
2014
|
|||||||
Earnings before federal income taxes
|
$
|
670,868
|
$
|
557,801
|
||||
Income taxes at federal statutory rate
|
$
|
228,100
|
$
|
189,600
|
||||
Effect of:
|
||||||||
Change in unearned premium balance
|
22,303
|
12,721
|
||||||
Other, net
|
(31,203
|
)
|
13,979
|
|||||
Provision for federal income taxes as reported
|
||||||||
on the Statements of Income
|
$
|
219,200
|
$
|
216,300
|
2015
|
2014
|
|||||||
Current
|
$
|
211,200
|
$
|
211,300
|
||||
Deferred
|
8,000
|
5,000
|
||||||
Provision for federal income taxes
|
$
|
219,200
|
$
|
216,300
|
2015
|
2014
|
|||||||
Deferred policy acquisition costs
|
$
|
11,000
|
$
|
7,000
|
||||
Property and equipment
|
(5,000
|
)
|
(5,000
|
)
|
||||
Accrued losses and loss adjustment expenses
|
2,000
|
3,000
|
||||||
$
|
8,000
|
$
|
5,000
|
2015
|
2014
|
|||||||
Deferred federal income tax liabilities:
|
||||||||
Deferred policy acquisition costs
|
$
|
116,000
|
$
|
105,000
|
||||
Property and equipment
|
6,000
|
11,000
|
||||||
Accrued losses and loss adjustment expenses
|
33,000
|
31,000
|
||||||
Net deferred federal income tax liability
|
$
|
155,000
|
$
|
147,000
|
7. | RELATED-PARTY TRANSACTION |
8. | REINSURANCE |
9. | STATUTORY FINANCIAL INFORMATION |
Statutory Net Earnings
|
Statutory Capital and Surplus
|
|||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||
$
|
438,973
|
$
|
336,859
|
$
|
4,901,365
|
$
|
4,739,460
|
9. | STATUTORY FINANCIAL INFORMATION (CONTINUED) |
10. | LEASES |
2016
|
$
|
60,171
|
||
2017
|
68,606
|
|||
2018
|
81,400
|
|||
2019
|
83,766
|
|||
2020
|
86,132
|
|||
Thereafter
|
140,927
|
11. | EMPLOYEE BENEFIT PLAN |
12. | COMMITMENTS AND CONTINGENCIES |
12. | COMMITMENTS AND CONTINGENCIES (CONTINUED) |
13. | SUBSEQUENT EVENTS |
UNITED CASUALTY AND SURETY INSURANCE COMPANY
|
||
BALANCE SHEETS
|
||
(UNAUDITED)
|
UNITED CASUALTY AND SURETY INSURANCE COMPANY
|
|||||
STATEMENTS OF INCOME
|
|||||
(UNAUDITED)
|
For the Three Months Ended
|
For the Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
OPERATING REVENUES:
|
||||||||||||||||
Premiums earned
|
$
|
559,254
|
$
|
663,521
|
$
|
1,690,180
|
$
|
1,949,418
|
||||||||
Salvage and subrogation
|
26,422
|
10,024
|
55,593
|
14,404
|
||||||||||||
Net investment income
|
24,863
|
22,401
|
73,868
|
70,280
|
||||||||||||
Total Operating Revenues
|
610,539
|
695,946
|
1,819,641
|
2,034,102
|
||||||||||||
OPERATING EXPENSES:
|
||||||||||||||||
Underwriting, acquisition and insurance expenses
|
466,978
|
494,294
|
1,358,578
|
1,407,610
|
||||||||||||
Losses and loss adjustment expenses
|
26,422
|
8,031
|
54,993
|
12,411
|
||||||||||||
Other (income) expense
|
-
|
(1,601
|
)
|
(2,054
|
)
|
(4,890
|
)
|
|||||||||
Depreciation and amortization expense
|
3,535
|
3,535
|
10,606
|
10,606
|
||||||||||||
Total Operating Expenses
|
496,935
|
504,259
|
1,422,123
|
1,425,737
|
||||||||||||
INCOME BEFORE FEDERAL INCOME TAXES
|
113,604
|
191,687
|
397,518
|
608,365
|
||||||||||||
FEDERAL INCOME TAXES
|
30,000
|
30,000
|
96,500
|
122,500
|
||||||||||||
NET INCOME
|
$
|
83,604
|
$
|
161,687
|
$
|
301,018
|
$
|
485,865
|
||||||||
See accompanying notes to the unaudited financial statements.
|
UNITED CASUALTY AND SURETY INSURANCE COMPANY
|
||
STATEMENTS OF CASH FLOWS
|
||
(UNAUDITED)
|
For the Nine Months Ended
|
||||||||
September 30,
|
||||||||
2016
|
2015
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net income
|
$
|
301,018
|
$
|
485,865
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
10,606
|
10,606
|
||||||
Amortization of bond premiums
|
3,763
|
2,025
|
||||||
Change in carrying value of certificates of deposit
|
(32,889
|
)
|
(30,094
|
)
|
||||
Changes in operating assets and liabilities:
|
||||||||
Increase in receivables
|
(414,893
|
)
|
(224,864
|
)
|
||||
Increase in prepaid reinsurance premiums
|
(1,608
|
)
|
(28,652
|
)
|
||||
Increase in other assets
|
(665
|
)
|
-
|
|||||
Increase in deferred acquisition costs
|
(45,694
|
)
|
(120,452
|
)
|
||||
Increase in accrued underwriting expenses
|
18,468
|
59,354
|
||||||
Increase in unearned premiums
|
169,531
|
372,043
|
||||||
Increase in federal income taxes payable
|
60,000
|
97,500
|
||||||
Net cash provided by operating activities
|
67,637
|
623,331
|
||||||
INVESTING ACTIVITIES:
|
||||||||
Proceeds from the sale of investments
|
1,008,106
|
497,130
|
||||||
Investment purchases
|
(100,000
|
)
|
(490,000
|
)
|
||||
Net cash provided by investing activities
|
908,106
|
7,130
|
||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Dividends paid to stockholders
|
(181,798
|
)
|
(207,539
|
)
|
||||
Net cash used in financing activities
|
(181,798
|
)
|
(207,539
|
)
|
||||
INCREASE IN CASH AND CASH EQUIVALENTS
|
793,945
|
422,922
|
||||||
CASH AND CASH EQUIVALENTS:
|
||||||||
Beginning of period
|
884,609
|
848,047
|
||||||
End of period
|
$
|
1,678,554
|
$
|
1,270,969
|
||||
SUPPLEMENTAL DISCLOSURES:
|
||||||||
Interest paid
|
$
|
-
|
$
|
-
|
||||
Income taxes paid
|
$
|
36,500
|
$
|
25,000
|
||||
See accompanying notes to the unaudited financial statements.
|
1. | ORGANIZATION AND BACKGROUND |
September 30, 2016
|
||||||||||||||||
Amortized Cost
|
Gross Unrealized Gains
|
Gross Unrealized Loss
|
Estimated Fair Value
|
|||||||||||||
U.S. Treasury securities
|
$
|
810,857
|
$
|
44
|
$
|
-
|
$
|
810,901
|
||||||||
Certificates of deposit, less than 12 months*
|
1,394,842
|
-
|
-
|
767,132
|
||||||||||||
Certificates of deposit, greater than 12 months*
|
2,028,868
|
-
|
-
|
971,491
|
||||||||||||
Total investments, held-to-maturity
|
4,234,567
|
$
|
44
|
$
|
-
|
$
|
2,549,524
|
|||||||||
Amount reported as investments, short-term
|
1,394,842
|
|||||||||||||||
Investments, long-term
|
$
|
2,839,725
|
December 31, 2015
|
||||||||||||||||
Amortized Cost/ Carrying Value
|
Gross Unrealized Gains
|
Gross Unrealized Loss
|
Estimated Fair Value
|
|||||||||||||
U.S. Treasury securities
|
$
|
814,620
|
$
|
6,295
|
$
|
-
|
$
|
820,915
|
||||||||
Certificates of deposit, less than 12 months*
|
1,766,686
|
-
|
-
|
1,761,240
|
||||||||||||
Certificates of deposit, greater than 12 months*
|
2,532,241
|
-
|
-
|
2,532,241
|
||||||||||||
Total investments, held-to-maturity
|
5,113,547
|
$
|
6,295
|
$
|
-
|
$
|
5,114,396
|
|||||||||
Amount reported as investments, short-term
|
1,766,686
|
|||||||||||||||
Investments, long-term
|
$
|
3,346,861
|
3. | DEFERRED POLICY ACQUISITION COSTS |
September 30,
|
December 31,
|
|||||||
2016
|
2015
|
|||||||
Deferred policy acquisition costs, beginning of period
|
$
|
289,812
|
$
|
261,976
|
||||
Policy acquisition costs deferred
|
467,701
|
665,884
|
||||||
Policy acquisition costs expensed
|
(422,007
|
)
|
(638,048
|
)
|
||||
Deferred policy acquisition costs, end of period
|
$
|
335,506
|
$
|
289,812
|
For the Three Months
|
For the Nine Months
|
|||||||||||||||
Ended September 30,
|
Ended September 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Policy acquisition costs expensed
|
$
|
145,884
|
$
|
184,655
|
$
|
422,007
|
$
|
511,913
|
||||||||
Payroll and payroll taxes
|
187,561
|
187,619
|
572,003
|
595,456
|
||||||||||||
Other operating expenses
|
133,533
|
122,020
|
364,568
|
300,241
|
||||||||||||
Underwriting, acquisition and insurance expenses
|
$
|
466,978
|
$
|
494,294
|
$
|
1,358,578
|
$
|
1,407,610
|
4. | PROPERTY AND EQUIPMENT |
September 30, | December 31, | |||||||
|
2016 | 2015 | ||||||
Equipment
|
$
|
80,667
|
$
|
80,667
|
||||
Furniture and fixtures
|
40,266
|
40,266
|
||||||
Leasehold improvements
|
24,265
|
24,265
|
||||||
145,198
|
145,198
|
|||||||
Accumulated depreciation and amortization
|
(133,293
|
)
|
(122,687
|
) | ||||
Property and equipment, net
|
$
|
11,905
|
$
|
22,511
|
5. | STATUTORY FINANCIAL INFORMATION |
Statutory Net Earnings
|
Statutory Capital and Surplus
|
|||||||||||||
September 30,
|
September 30,
|
September 30,
|
December 31,
|
|||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||
$
|
265,935
|
$
|
376,019
|
$
|
5,064,193
|
$
|
4,901,365
|
6. | SUBSEQUENT EVENTS |
Item
|
|
13. Other Expenses of Issuance and Distribution.
|
SEC Registration Fee
|
$
|
5,331.40 |
|
NASDAQ Listing Fee*
|
|||
FINRA Filing Fee*
|
|||
Accounting Fees and Expenses*
|
|||
Legal Fees and Expenses*
|
|||
Printing Fees and Expenses*
|
|||
Blue Sky Fees and Expenses*
|
|||
Miscellaneous*
|
|||
|
|
|
|
Total
|
$
|
|
|
Item
|
14. Indemnification of Directors and Officers
|
Item
|
15. Recent Sales of Unregistered Securities.
|
· |
On
April 10, 2015, we borrowed in the aggregate $200,000.00 and entered into separate promissory note arrangements with each of
our two majority shareholders,
Boulderado Partners, LLC ("Boulderado") and Magnolia Capital Fund, LP ("Magnolia"), whereby we borrowed $100,000 from each of Boulderado and Magnolia under the terms of a convertible promissory note (the "April Notes").
|
· |
On June 19, 2015, we issued 500,000 shares of our Class A Common Stock to each of Boulderado and Magnolia, for a total of 1,000,000 shares, at a price of $10.00 per share, for a total of $10,000,000.
|
· |
On June 19, 2015, we issued 15,164 shares of our Class A Common Stock to each of Boulderado and Magnolia pursuant to an exercise of certain promissory notes having a total principal and interest due of $151,645, for a total of 30,328 shares.
|
· |
On June 19, 2015, we issued 12,616 shares of our Class A Common Stock to each of Boulderado and Magnolia pursuant to an exercise of the April Notes, for a total of 25,232 shares.
|
· |
On June 19, 2015, we issued to each of Boulderado and Magnolia 51,576 warrants to purchase shares of our Class A Common Stock at a price of $10.00 per share, and 1,262 warrants to purchase shares of our Class A Common Stock at a price of $8.00 per share.
|
· |
On July 22, 2015, we issued 250,000 shares of our common stock to Boulderado and 1,200,000 shares of our common stock to Magnolia, at a price of $10.00 per share, for a total of $14,500,000.
|
· |
From February through August 2016, we issued an aggregate of 4,124,463 shares of our common stock to accredited investors at a price of $10.15 per share, for a total of $41,863,306. Boulderado acquired 350,051 shares in such offering and Magnolia acquired 2,566,798 shares in such offering.
|
Item
|
16. Exhibits and Financial Statement Schedules
|
(*) To be filed by amendment.
(**) Incorporated by reference to the filing indicated.
(#) Filed herewith.
|
Item
|
17. Undertakings
|
Boston Omaha Corporation
|
||
By:
|
|
/s/ Alex B. Rozek
|
Name:
|
|
Alex B. Rozek
|
Title:
|
|
Co-Chairman of the Board of Directors and Co-Chief Executive Officer
(Principal Executive Officer)
|
Signature
|
|
Title
|
|
Date
|
/s/ Alex B. Rozek
|
|
Co-Chairman of the Board of Directors and Co-Chief Executive Officer
|
|
February 13, 2017
|
Alex B. Rozek
|
(Principal Executive Officer) | |||
/s/ Joshua P. Weisenburger
|
|
Chief Accounting Officer (Principal Financial Officer)
|
|
February 13, 2017
|
Joshua P. Weisenburger
|
||||
/s/ Bradford B. Briner
|
|
Director
|
|
February 13, 2017
|
Bradford B. Briner | ||||
/s/ Brendan J. Keating
|
|
Director
|
|
February 13, 2017
|
Brendan J. Keating
|
||||
/s/ Adam K. Peterson | Director | February 13, 2017 | ||
Adam K. Peterson
|
|
|
|
|
Address: |
96 Sims Road
|
|
COMPANY
|
|
|
|
|
|
|
|
|
By: |
|
|
Name: |
|
|
Title: |
|
|
|
|
|
|
|
|
INDEMNITEE
|
|
|
|
|
|
|
|
|
Name:
|
|
|
|
|
|
|
|
Address: | ||
|
|
|
·
|
Link Media Holdings, LLC
, a Delaware limited liability company.
|
·
|
Link Media Alabama, LLC
, an Alabama limited liability company (wholly owned by Link Media Holdings, LLC).
|
·
|
Link Media Florida, LLC
, a Florida limited liability company (wholly owned by Link Media Holdings, LLC).
|
·
|
Link Media Georgia, LLC
, a Georgia limited liability company (wholly owned by Link Media Holdings, LLC).
|
·
|
Link Media Wisconsin, LLC
, a Wisconsin limited liability company (wholly owned by Link Media Holdings, LLC).
|
·
|
General Indemnity Group, LLC
, a Delaware limited liability company.
|
·
|
General Indemnity Direct Insurance Services, LLC
, a Delaware limited liability company (wholly owned by General Indemnity Group, LLC).
|
·
|
General Indemnity Insurance Company PCC, LLC
, a Washington D.C. limited liability company (wholly owned by General Indemnity Group, LLC).
|
·
|
The Warnock Agency, Inc.
, a Georgia corporation (wholly owned by General Indemnity Group, LLC).
|
·
|
United Casualty and Surety Insurance Company
, a Massachusetts corporation (wholly owned by General Indemnity Group, LLC).
|